- Financial services contributed £290bn to UK GDP in 2025.
- Mortgage lending jumped 20.4 per cent to £296.2bn.
- Private credit market expanded 43 per cent between 2013 and 2024.
The UK financial services sector contributed £290 billion to the economy in 2025, accounting for around 11 per cent of total economic output, as stronger lending activity, a recovery in the mortgage market and growing private credit investment helped drive growth.
New figures from TheCityUK's UK Key Facts report underline the importance of the UK financial services industry to the wider economy at a time when policymakers are looking to the sector to support long-term growth. The report found that productivity across financial and related professional services, including accountancy, was 2.6 times higher than the average across the UK economy.
The findings come as chancellor Rachel Reeves continues to place financial services at the centre of the government's growth strategy, with ministers pursuing regulatory reforms aimed at encouraging investment and improving access to finance for businesses.
Lending picks up as rates ease
The report suggests that falling interest rates played a significant role in reviving activity across key parts of the market.
Mortgage lending rose 20.4 per cent year-on-year to £296.2bn in 2025 as borrowers returned to the market after a prolonged period of high borrowing costs. Interest rates, which reached 5.25 per cent in 2024, gradually fell to 3.75 per cent by the end of 2025, helping improve affordability and boost confidence among homebuyers.
The recovery was supported by the Bank of England's decision to begin cutting rates in August 2024, marking the first reduction since 2021.
Business lending also remained a significant part of the sector's activity. Of the £582bn in outstanding loans provided by UK banks to businesses as of February 2026, around one-third had been lent to small and medium-sized enterprises.
Anjalika Bardalai, chief economist at TheCityUK, reportedly said the industry's contribution extends beyond headline economic figures, noting that it plays a broader role in supporting businesses and investment across the economy. She added, as quoted in a news report, that maintaining competitiveness remains important as firms navigate geopolitical uncertainty, technological change and shifting market conditions.
New sources of finance gain ground
The report also points to changing patterns in how businesses access funding.
Banks are increasingly acting as strategic partners and financial backers to private credit funds rather than solely providing loans directly themselves. This reflects the growing influence of private credit, a market where investors provide financing directly to companies outside the traditional banking system.
According to the report, the UK's private credit market expanded by 43 per cent between 2013 and 2024, highlighting the increasing role of alternative finance providers in supporting business growth.
At the same time, lower interest rates appear to have encouraged savers to seek more predictable retirement income. Spending on individual pension annuities reached £7.4bn in 2025, the highest level since 2014.
Taken together, the figures suggest the financial services sector remains one of the UK's most productive industries, while shifts in borrowing, lending and investment behaviour continue to reshape the way capital flows through the economy.
