Industry Insights

Financial & Insurance

Amidst growing global competition, key opportunities include:

• Implementing the Financial Services and Markets Act
• Fortifying EU-UK business ties
• Finalising the UK-Switzerland Mutual Recognition Agreement
• Embracing digital transformation

To stay globally competitive, the UK must prioritise regulatory support, strengthen EU-UK business ties, complete key agreements, embrace digital innovation, and expedite digital ID implementation. The City of London Corporation’s “Finance for Growth: A Roadmap” aims to secure the UK’s role as a global financial centre.

In the insurance sector, the UK leads Europe in domestic insurance premiums and ranks fourth globally for life and non-life premiums. Direct employment surpassed 114,000 in 2020. The General Insurance sector anticipates a gradual revenue decline by 2023-24, influenced by regulatory changes and the impact of global events, including the COVID-19 pandemic and Russia’s invasion of Ukraine.

The General Insurance industry in the UK demonstrates low market share concentration, with the top four companies accounting for less than 40% of revenue, contrasting the broader Finance and Insurance sector’s average concentration of approximately 25%.

In conclusion, the UK’s insurance market remains a significant global player, adapting to challenges while shaping its future dynamics and strategies (GOV UK, 2023; IBIS World, 2023; Statista, 2023).

Industry Challenges

• Leveraging the agility of fintech innovations
• Addressing geopolitical tensions in a globalised market
• Balancing buy-now-pay-later practices with responsible
lending
• Adapting legacy products to meet evolving standards:
a challenge for companies

(Towergate, 2023; Grant Thorton, 2023; The Guardian, 2023)

Investment Opportunities

• Foster business growth while effectively safeguarding and managing risk
• Commit resources to job creation, skill development, product/service enhancement, and workforce empowerment
• Encourage foreign direct investment into the United Kingdom

(Reuters, 2023; The City Uk,2023;)

Statistics

At the heart of the UK’s economic engine lies the financial and professional services (FPS) industry, contributing an astounding 12% to the nation’s entire economic output

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Within the United Kingdom, the Finance and Insurance sector boasts an average concentration of 25%

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The Financial & Insurance activities sector in the UK is a significant employer, with a workforce exceeding 1.5 million employees

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(GOV UK, 2023; The Global City, 2023; IBIS World, 2023; ONS, 2023)

Administrative & Support Services

The Administrative and Support Services industry includes various activities that support general business operations (Statista, 2022). The sector is the second industry with the largest businesses in the UK, 1,200 businesses, and the second largest sector in significant business employment, which accounts for 14% of the total (Department of Business, Energy & Industrial Strategy, 2023). In 2022, the Administrative and Support sector employed approximately 1.4 million people (ONS,2023).

Despite the negative impact on the industry due to the pandemic, the Great Resignation and Brexit business confidence will likely rise during the next five years as the economy recovers, which is expected to stimulate capital expenditure on industry services (IBIS World, 2022). Technological innovation is affecting how information is being handled, becoming a key growth industry accelerator. Digital archiving, big data and office automation applications, to name a few, are helping to make administrative data management and processes quicker, cheaper, more efficient and less human resource-intensive than before (Jobted, 2022).

Looking at the sector from within, workers are increasingly nervous about moving roles when the economy already feels unsteady, so more thought is going into career moves than ever before. This benefits businesses that can keep staff longer; however, staff need to be motivated to ensure they stay for the right reasons.

The ‘community’ feeling that workers used to get in offices is now largely obsolete due to increased remote working, meaning that there is often less workplace loyalty. Employers must promote the ‘company brand’ internally to create a positive company culture to attract and retain talent (Recruitment, 2023).

Industry Challenges

• Brexit
• High competition for talent
• Lack of talent pools
• Low barriers to entry

(ICIMS, 2022; IBIS World, 2022)

Investment Opportunities

• Sustainability
• The digitalisation of administrative processes
• Franchises for sale – especially cleaning subsector

(Global Trade Review, 2023; Franchise UK, 2022; Franchise Direct, 2022;

Statistics

Temporary-Employment Placement Agencies in the UK Market Size in 2023 is estimated to be $42.9bn
(IBIS World, 2023)

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HR providers’ revenue has reached £2 billion over the five years through 2022-23 (IBIS World, 2023)

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Over the five years through 2023-24, call centres’ revenue is forecast to increase at a compound annual rate of 5% to reach £3.4 billion (IBIS World, 2023)

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Wholesale & Retail

Challenges persist, including supply chain uncertainties exacerbated by Brexit, the pandemic, and global events like the fuel crisis and the Ukrainian war (OGL Software, 2022).

Companies within this sector strategically respond by reallocating resources for innovation, focusing on high-value activities such as product innovation, and leveraging technology for operational efficiency (KPMG, 2023). Simultaneously, technology, including artificial intelligence and automation, rapidly reshapes the industry (Salsita, 2022; Better Wholesaling, 2023).

In the retail sector, high prices, increased interest rates, and reduced consumer savings continue to impact spending. Wage increases may offer relief, but retail profitability remains under pressure, particularly in non-food categories (Fitch Ratings, 2023). However, retail and e-commerce markets are adapting to the changing landscape by investing in drone technology to reduce delivery times and enhance profitability (Research & Markets, 2023).

The demand for skilled individuals in retail and wholesale is evident in the labour market, with a substantial increase in job advertisements. It has led to a competitive environment among firms for the right talent (British et al., 2022; Recruitics, 2023). To navigate these challenges, industry operators are adopting thoughtful approaches, including streamlining processes, providing digital access to data, and focusing on employee development for staff retention and attracting new talent (Better Wholesaling, 2023; Recruitics, 2023). Balancing these factors is crucial for the long-term success of wholesale and retail businesses in a dynamic and ever-evolving market.

Industry Challenges

• Inflationary pressures
• Global supply chain issues and logistical disruptions
• Shift in consumer requirements and preferences
• Workforce challenges

(PwC, 2023; Fitch Ratings, 2023; BDO,2023)

Investment Opportunities

• Online channel operation
• The manufacturer-to-consumer journey simplification
• Employer Branding and Employee engagement

(PwC, 2023; Fitch Ratings, 2023; Better Wholesaling, 2023)

Statistics

In 2022, the estimated revenue of the industry is expected to be 854.9 billion pounds (Statista, 2023)

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The total value of UK retail sales in 2022 was £441 bn (Retail Economics, 2023)

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