Executive
summary

In the EY research, financial services leaders across Scotland highlighted several key factors – including macroeconomic trends, policy, demographics, technology and regulation – that could accelerate the growth of the Scottish financial sector, provided the market can leverage its competitive advantages and overcome barriers to growth.

Modelling based on insights from financial services leaders suggests that if Scotland can seize “accelerator” opportunities and overcome the potential barriers set out in this report, its financial services sector – excluding professional services – has the potential to increase annual GVA contribution to the nation’s gross domestic product (GDP) by 21% by 2028 – translating to an average annual growth rate of 4%^[1]. This supports the Scottish Financial Enterprise (SFE) sector growth strategy, that aims to grow financial services plus related professional services GVA to £17bn-£21bn in five years.

Addition of 16,000 new jobs by 2028 (18% increase)

^[1]The survey and in-depth interviews included questions about financial services leaders’ turnover growth projections over a five-year horizon. These projections were incorporated based on historical financial services sector turnover-to-Gross Value Added (GVA) ratios to translate expected turnover growth into expected GVA growth for Scotland’s FS sector, as of November 2024. Survey responses were skewed to large corporations, so were adjusted to reflect the demographic composition of the Scottish Financial Services sector. In addition, the forecast assumed a stable economic environment.

Technological infrastructure and innovation
When asked about growth drivers for Scotland’s financial services sector, 94% of respondents highlighted “technology and innovation” as a crucial catalyst for sector advancement.

Regulatory and legal framework
93% of leaders consider Scotland’s regulatory and legal frameworks vital to the country’s future growth trajectory and leaders believe Scotland has a competitive strength underpinned by fast and consistent policymaking.

Cross-border business and trade environment
86% of financial services leaders view Scotland’s cross-border business and trade environment as crucial for future growth, however, diminished access to the European market post-Brexit is seen as a relative disadvantage.

Demographics and labour supply
Although 91% of leaders recognize demographics and labour supply as essential to Scotland’s goal of becoming a world-leading financial hub, challenges remain in attracting and retaining top talent, particularly across borders.

Macroeconomic fundamentals and policy
Scotland’s macroeconomic and policy environment is viewed as a critical growth driver by the vast majority (94%) of financial services leaders, though the market’s comparatively high rates of personal tax are perceived to be a headwind to the sector’s competitiveness.