December 2, 2010 • 4:32 pm

“Financial and related professional services account for about 14 per cent of our GDP, rather more than manufacturing.” Editorial, Daily Telegraph, 1 December 2010


Cautioning against the demonisation of The City, and the wider contribution of the financial sector to the UK economy, yesterday’s Telegraph editorial warned that excessive taxes on banks and bankers could prove counter-productive, driving away a lucrative source of state revenue.

Yet what interested Full Fact wasn’t the claim about the square mile’s fiscal contribution, but that regarding its size relative to the rest of the UK economy.

What was claimed in the article didn’t seem to fit what we found when we looked at the subject last.


The Office for National Statistics (ONS) ‘Blue Book‘ offers a breakdown of the contribution of different sectors to the economy.

As an ONS statistician explained to us the last time we investigated, this is conventionally measured in Gross Value Added (GVA), rather than Gross Domestic Product (GDP) although in practice there is little difference between the two.

“When we look at the industry breakdown we tend to look at GVA, although the two can be used almost interchangeably. If we looked at GDP we would need to add taxes and deduct subsidies at the industry level,” we were told.

But when we look at the GVA figures, it seems there is little that chimes in the with Telegraph figure.

In 2008, Finance and business services as a whole contributed almost £420 billion – but this is approximately 32 per cent of the total, far higher than what the Telegraph suggests.

But this higher figure includes things such as accountants and consultancy services.

An alternative and arguably more accurate measure of the role of the City is the measurement of the part of the economy classed as ‘financial intermediation’. This narrower definition is confined to things like banks and hedge funds.

Taken in isolation, financial intermediation accounts for 9 per cent of total GVA.

Not only does this leave us scratching our heads as to how the Telegraph arrived at 14 per cent but it also questions the assertion that this represents a bigger contribution than manufacturing.

According to the most recent Blue Book, Manufacturing contributed 11.6 per cent of total GVA.


Working with the ONS figures there seems to be some doubt over the Telegraph’s claim.

If by ‘financial and related professional services’ the article meant ‘financial and business services’ as classified by the ONS, then the contribution to the economy is much higher than manufacturing, but it is also much higher than the 14 percentage referenced in the editorial.

If we look at a better measure of what would constitute the financial sector, a number both lower than the one in the Telegraph and than the contribution of manufacturing can be seen – again making

We will contact the Telegraph to flag up the inconsistency, and hopefully they can shed some more light on it.

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