Financial services contributed a tenth of UK economic output in 2025 

The financial services sector contributed over a tenth of the UK’s economic output in the last year as the industry’s productivity outpaced average momentum. 

The industry provided a £290bn boost to the UK’s real GDP – a macroeconomic measure that adjusts the value of economic output for inflation – in 2025 marking around 11 per cent of total output, according to TheCityUK’s latest UK Key Facts report. 

Productivity across the sector – which also includes related professional services industries such as accounting – was 2.6 times higher than that of the whole economy by measure of total values of goods and services produced per hour.

“Beyond these headline macroeconomic indicators, the data in our report underline the industry’s broader enabling role within the economy,” wrote TheCityUK’s chief economist Anjalika Bardalai.

She added maintaining the competitiveness of this industry remains critical at a time when the broader economic environment continues to be “shaped by geopolitical developments, technological change and rapidly evolving market conditions.” 

Mortgage lending bounces on lower interest rates

The government has framed their economic plan around the financial services sector, which Rachel Reeves has said sits at the “heart” of its growth plan.

In the King’s Speech, it launched its Enhancing Financial Services bill, which aimed to boost the industry through reforms to regulation and help unlock a deeper pool of capital for small businesses.

Major UK banks beefed up their lending to smaller businesses in the last year, according to the report. Of the £582bn in outstanding amount of loans from UK banks to business as of February 2026, around a third of this was lent to small- and medium-sized enterprises.

Mortgage lending staged a mammoth recovery, surging 20.4 per cent year-on-year in 2025 to £296.2bn. It came as the market steadily rebounded from the restrictive grip of high interest rates that peaked at 5.25 per cent – a post-financial crisis high – in 2024 but were gradually whittled down to 3.75 per cent by the end of 2025.

TheCityUK report said the swing in the market was “supported by the Bank of England’s decision in August 2024 to cut interest rates for the first time since 2021.”

The changing monetary climate also drove savers to opt for more guaranteed income streams, such as individual pension annuities. The shift pushed the total amount spent on these retirement products to a post-2014 high of £7.4bn in 2025. 

The report notes a trend of banks shifting from lending directly to instead acting as “strategic partners and financial backers” to private credit funds. The UK’s private credit market – which provides non-bank debt financing directly to companies – grew at a staggering 43 per cent between 2013 and 2024.

With additional reporting from Benedict Loughran