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How influential is the City of London within the UK economy?

Each day we hear news regarding lucrative remuneration packages in the financial sector, the power of the stock market and the need to rein in risk-taking in the UK banking sector. But how influential is the City of London financial market against the overall UK economy?

When you consider that back in 1998, when we entered a period of deregulation which created a significant boom in the UK financial markets, there were only 290,000 jobs in the city against 353,000 at the peak in 2007 this just about says it all. The UK financial services industry, at the height of its power, contributed around 30% of total corporation tax payments to the UK government and instigated something of a boom in public spending and the UK economy. While the power of the City has reduced somewhat over the last few months, this is one institution which should not be underestimated.

Primarily because of the increase in activity within the financial sector, growth in the UK economy was positive for every quarterly period between 1997 and 2007, prior to the credit crunch. So those who mock and criticise the City of London markets may need to think again.

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