The importance of Britain's financial services sector is overstated and only 3.5 percent of UK economic output is likely to be directly affected by the credit squeeze, according to US investment bank Goldman Sachs. While the broad category "financial and business services" accounts for over 30 percent of national output, only a quarter of this is financial services.
Even within this narrow subsector, only a fraction of activity relates to wholesale markets, the eye of the credit market storm, the world's biggest brokerage by market value said.
Only around 15 percent of UK business done by major UK banks is in the wholesale capital markets or corporate finance. according to Goldman's equity analysts. Britain's national statistics office has had difficulty keeping tabs on financial services growth in recent years, leading to a wide range of estimates over how much economic clout the sector wields.
Goldman Sachs argues that its importance, and the associated vulnerability of the UK economy are "routinely exaggerated." It calculates that, at 4.1 percent, the share of financial services jobs in Britain is well below Switzerland, where it is 6 percent, and within one percentage point of levels in France or Germany.
It also argues that there is no clear link between growth in the financial sector and asset prices. "Global equity prices are much better correlated with non-financial activity in the UK than with UK financial services output," it concludes.
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