News story

EU membership crucial for Newcastle’s thriving financial services industry, says UK City Minister

Leaving the EU could damage the North East's reputation as a financial hub, says Economic Secretary Harriett Baldwin.

Visiting Newcastle, the Economic Secretary will dispel the myth that leaving the EU would simply be a problem for the City of London and that the wider UK financial sector in places like Newcastle would not be affected.

She will highlight the importance for staying in the EU to a sector that plays an important role in North East’s thriving economy. The financial sector adds around £2 billion to the region’s economy every year. The industry supports around 53,000 jobs in the region, with 26,000 people working directly in financial services and another 27,000 working in associated professional services.

The Economic Secretary will use her visit to argue that the success of the North East’s financial sector could be put at risk by a vote to leave the EU.

Economic Secretary to the Treasury, Harriett Baldwin said:

The financial services industry in the North East makes an important contribution to the Northern Powerhouse. Today I am visiting True Potential and Virgin Money, two firms that make are going from strength to strength in Newcastle. They play an important role in the local economy and are part of a financial services industry that employs around 26,000 people with a further 27,000 in related professional services.

Voters in Newcastle and across the country faces a fundamental choice – whether to remain a member of a reformed EU, or to take a leap into the dark.

A vote to stay in Europe will protect jobs in the North East, promote economic growth and ensure that the regional financial services sector continues to grow.

Let’s make the right choice on the 23 June. Let’s stay in.

Newcastle is at the heart of the North East’s financial services industry, accounting for around a quarter of all financial and associated professional services jobs in the region. It hosts Virgin Money, who employ around 2,000 people in the city, as well as major operations of firms such as AA insurance, Tesco Bank, Santander and, of course, the Newcastle Building Society. Another challenger bank, Atom Bank, is based in nearby Durham. Being a member of the EU has meant that the UK has full access to the single market- a market of over 500 million customers and an economy over five times bigger than the UK’s.

In financial services, access to the single market helped the UK sector to export over £22 billion of financial services to the EU in 2014. This is around 33% of the UK’s total financial and insurance and pensions services exports.

New Treasury analysis shows 285,000 jobs across the UK are linked to financial services exports to the EU. 100,000 financial services jobs are directly linked to these exports, and a further 185,000 jobs are linked to the indirect demand generated in the wider economy as a result of financial services exports to the EU.

Leaving the EU would put tens of thousands of these jobs at risk across the UK.

Around half the world’s largest financial firms have chosen to base their European headquarters in the UK. In 2014, the amount of investment in the UK’s financial services sector, by companies based across the world reached £280 billion - 17% of this was from the EU.

Across all sectors of the economy, almost three quarters of foreign direct investors said the UK’s access to the EU market was an important factor behind the attractiveness of the UK as a destination for investment.

Given the impact that a vote to leave will have on the economic outlook, something that is so crucial for start-up businesses, the Economic Secretary has chosen to visit True Potential.

True potential is one of the fastest growing FinTech firms in the UK. It employs over 230 people in the head office in Newcastle, which has increased by 26% since January 2016. True Potential also appeared in the Deloitte Technology Fast 500 EMEA for three years running and UK Technology Fast 50 for the past two years.

While in Newcastle Harriett Baldwin will also visit Virgin Money. Here, alongside Jayne-Anne Gadhia, the CEO of Virgin Money, she will give an all-staff address to Virgin Money employees on the benefits to financial services in the North East of remaining in the EU.

Jayne-Anne Gadhia, CEO of Virgin Money, said:

Working with our European partners, Britain has helped create the biggest market in the world. Membership of the EU gives us unrestricted access to 500 million consumers and, with around 100,000 jobs in the North East linked to exports to the EU, remaining as a strong part of a reformed EU protects our jobs, our incomes and our future.

The benefits of EU membership significantly outweigh the costs and I believe the path to a more certain and prosperous future for our families, business, innovation and investment is to vote Remain on 23 June.

The speeches will also touch on the work that Virgin Money has undertaken with the Treasury on tackling the barriers which women can face in reaching senior positions in financial services firm.

Economic Secretary to the Treasury, Harriett Baldwin said:

Achieving gender balance at all levels across financial services firms is a personal priority of mine. Removing the barriers which prevent women from fully realising their potential in the labour market is a crucial part of improving the UK’s long-term economic performance.

It is fantastic that a number of leading financial services firms have already committed to sign up to our new ‘Women in finance charter’ and I encourage all firms across the sector to follow suit.

New Treasury analysis published on Monday showed that the North East’s economy would be tipped into recession and unemployment could rise by 20,000 if Britain voted to leave the EU.

This analysis shows that such a decision would cause an immediate and profound economic shock across the country, including in the North East, creating instability and uncertainty which would be made worse by the complex negotiations that would follow to agree the terms of Britain’s exit from the EU and its new relationship with the rest of Europe.

It is clear that the North East currently benefits from the UK being a member of the EU. The Treasury analysis shows that, across all sectors, around 100,000 jobs in the region are linked to the UK’s exports to other EU countries.

The region has also benefited from £1.1 billion of inward investment from EU members over the last 5 years, with 90 foreign investment projects in the North East creating or safeguarding almost 6,000 jobs.