The UK remains one of the world’s leading financial centres, supported by deep capital markets, legal certainty, a strong talent base, a favourable time zone and trusted regulation. However, its competitive margin is narrowing. The report’s central warning is not of an abrupt departure of international banks, but of a gradual “quiet leak” of capital, risk-booking, specialist teams and future investment to rival centres in North America, Europe, the Middle East and Asia.

The assessment argues that competitiveness must be managed as an active, cross-government policy objective rather than treated as an inherited advantage. International institutions continuously choose where to deploy capital and build operations, and accumulating friction in the UK is changing those decisions at the margin.

Evidence base and economic significance

The study was developed by UK Finance and Norton Rose Fulbright, anchored in the work of UK Finance’s International Banking Strategic Advisory Group, which represents 56 non-UK headquartered banks. Its findings are further informed by direct research with senior executives from 14 international banks employing approximately 35,000 people in the UK.

• More than 160 non-UK headquartered banks operate through UK subsidiaries and branches and manage around 40% of UK banking assets.
• International banks support high-value employment in London and regional centres including Birmingham, Belfast, Bournemouth, Edinburgh and Glasgow.

Core findings

1. The UK retains substantial strengths

The UK’s established ecosystem remains highly attractive: liquid and sophisticated markets, globally respected legal and regulatory institutions, specialist skills, international connectivity and a time zone that bridges Asian and American trading hours. These advantages continue to support the UK’s role as a global command centre for financial activity.

2. Accumulating friction is weakening the proposition

Interviewees highlighted post-Brexit market-access barriers, regulatory divergence and duplication, high cumulative taxation, rising operating costs and constraints on mobility. Each issue may appear manageable in isolation, but together they influence where global firms place incremental investment, functions and senior roles.

3. The principal risk is a quiet leak of activity to other financial centres

The report does not predict a sudden institutional exodus. Instead, it identifies a more subtle risk: new mandates, teams and investment being directed elsewhere over time. Several senior executives indicated that, if choosing a European or global base from scratch today, they would not automatically select the UK.

Six policy priorities

1. Preserve openness. Protect flexible third-country branch arrangements, maintain the Overseas Persons Exclusion and use the Overseas Recognition Regime to reduce unnecessary duplication.
2. Provide tax predictability. Avoid further sector-specific tax increases and establish a stable, long-term framework that supports investment decisions.
3. Strengthen talent mobility. Streamline visas and sponsorship for specialist roles, simplify the Senior Managers and Certification Regime and reinforce the UK’s broader quality-of-life offer.
4. Lead on innovation and AI. Make AI-enabled financial services a national priority, improve data-centre capacity and accelerate tokenisation, digital-money initiatives and Islamic finance, including sovereign sukuk issuance.
5. Deepen capital markets. Reduce listing friction, facilitate dual listings with high-growth regions and advance credible sustainable-finance standards.
6. Create senior accountability. Establish an annual International Banking Roundtable bringing together ministers, regulators, investment officials and bank chief executives, with measurable delivery commitments.

Strategic implications

• For government: align tax, regulation, trade, infrastructure, immigration and investment policy around a shared competitiveness objective, supported by clear ownership and measurable outcomes.
• For regulators: preserve high standards while reducing unnecessary duplication, delay and operating complexity for internationally active firms.
• For industry: provide continuing evidence on investment decisions, regional employment and emerging barriers, and work with policymakers on practical reforms.

Conclusion

The UK begins from a position of considerable strength, but global leadership is no longer self-sustaining. A coordinated programme that improves openness, predictability, mobility, innovation, market depth and accountability would help retain international banking activity and secure the next generation of high-value investment and employment.