LONDON: High-earning UK bankers, lawyers and consultants are now some of the workers most vulnerable to trade shocks, according to the Resolution Foundation.
In a report published yesterday, the think tank said the declining importance of manufacturing and the rise of export-oriented services mean the risks of international exposure have shifted from the factory floor to cities and offices.
“As we have become a more open and services-based economy, it is accountants and bankers rather than factory workers whose jobs are most exposed,” said Sophie Hale, principal economist at the Foundation.
“We need to worry less about foreign factories replacing our own and more about foreign firms no longer wanting our services.”
The findings underline the challenges ahead for Prime Minister Rishi Sunak’s ambitions of driving growth through the “knowledge economy”.
Trade in financial and other business services, such as management consulting, contributed over £130bil (US$164bil) to the UK economy in 2023, the Office for National Statistics estimates.
The consulting sector derives over a 10th of its revenue from overseas work, according to Source Global.
Trade as a share of the economy increased from 53% to 65% of gross domestic product between 2000 and 2023, leaving workers more exposed to global demand shifts, the Resolution analysis found.
Workers in areas like banking and accounting are disproportionately affected as trade shifts toward exporting their services.
At the same time, the poorest families are more vulnerable to volatile shop prices as they consume more imported goods.
The UK financial services sector was more reliant on exports than manufacturing in 2019, a reversal of the situation in the early 2000s, when workers in domestic factories were most at risk from cheaper imports from China.
Professional services and information and communications technology are also closing the gap with manufacturing, the report found.
Trade figures last week underlined just how exposed these sectors are to downturns in foreign markets.
Exports of services fell by £5.2bil in the fourth quarter, with £4.3bil of that decline coming from “other business services” – a category that includes consultants, accountants and lawyers. — Bloomberg
