The financial services industry is Britain’s hidden treasure, says ALEX BRUMMER

The Conservatives’ inability to paint a more positive picture of Britain’s economic and financial progress is hugely frustrating.

The headlines are dominated by failures as the mismanagement of Royal Mail and the rising costs of nuclear power at Hinkley in Somerset, run by French state energy company EDF, are blamed on a lack of leadership in Downing Street.

The polls show that the public is still under the impression that Britain is in a unique cost-of-living crisis, with inflation, despite the occasional dip, plummeting along with borrowing costs.

The British purchasing managers index continues to rise, helped by good services.

There is much that Britain, the world’s fifth largest economy, does better than its peers.

A more alert government apparatus would have been all over the airwaves for the past 24 hours, trumpeting the annual review of Britain as a leader in financial and business activity prepared by the City Corporation and Treasury.

Excellence, in a part of the economy that many predict would be eviscerated by Brexit, is intact.

In the report, which compares the city’s performance with other world centers on a 101-metre basis, London topped the rankings. New York is in second place, Singapore in third place and Frankfurt and Paris follow.

This is not to say that everything is great. London’s stock market has lost ground as foreign listings pick up.

But there is a lot to shout from the rooftops. Foreign direct investment in UK finance rose by 68 per cent in 2021-22 (latest figures), with asset managers and fintechs opening offices and creating 15,000 jobs. Who knows?

Around £4.2 trillion of assets for foreign clients are managed from Britain. It’s a shame that, with so much investment firepower in Britain, so little is finding its way into London-listed shares.

Moreover, even though Britain has 138 unicorns – start-ups valued at $1 billion (£784 million) or more – there are real questions about how many of them will become national champions and avoid foreign predators.

Freeing up pension assets will be a key issue for the next government, regardless of its political leanings.

One of the problems with British business is that the business services sector, where we are winners, is difficult to see. There are no beautiful wind turbines, shiny factories, cranes or warehouses with robots.

But they generate huge revenues: management consultancy £42 billion, other business services £62 billion. That’s before other areas such as travel, telecom and data are taken into account.

There is a view that services consist of haircuts and coffee shops, and contribute only marginally to prosperity.

If the Tories could communicate better, they would have a formidable story to tell. Instead, they are bent on self-immolation.

Travel bug

Here’s a puzzle. Shaking off the memory of cost-of-living pressures in 2022-2023 is seen as the biggest obstacle to the return to power of incumbent governments in Britain and the US.

Yet, despite supposedly tight household budgets, there is an insatiable demand for travel abroad.

Easyjet is an example of this. The no-frills airline has taken a £40m write-off following the suspension of flights to Israel and Jordan due to the Gaza conflict. However, shares rose 5 percent early yesterday.

The jump reflected a smaller first-quarter loss than expected and boss Johan Lundgren’s optimism that ‘travel remains a priority’.

The stock has risen 57 percent since January last year, despite geopolitical unrest and concerns about jet fuel prices.

The confidence is reflected in the decision to continue with 16 new aircraft.

A decision to use CFM engines made by GE and Safran underlines the need for British engine maker Rolls-Royce to return to narrow-body aircraft.

Jet streaming

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Equally fascinating is the £3.9 billion deal between Netflix and WWE to broadcast the wrestling franchises Raw and Smackdown.

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