The United Kingdom must move faster in regard to tokenization and innovation in financial services, such as the usage of artificial intelligence (AI). These are true words, as London has long been a global financial hub, but it is at risk of falling behind due to policy shortfalls and a lack of urgency as other jurisdictions move toward the future of financial services. Innovators and money can vote with their feet, and the current stasis should not be acceptable. Dithering results in a loss for the entire population.
A report published by TheCityUK and PwC advocates for “bolder ambition and faster, more decisive action.”
“The UK must lead the world in tokenised and AI-enabled financial markets or risk areas of historic UK strength.”
The report is aptly titled ‘No time to lose: Reasserting UK leadership in financial and related professional services’.
Noting that one in 13 jobs in the UK is affiliated with the financial services sector and that the sector generates 11% of economic output, if the UK does not step up and aggressively embrace innovations such as digital assets, the ramifications could be grim.
To quote the report:
“The UK’s international outlook increases the industry’s exposure to geopolitical volatility, rising protectionism, and regulatory fragmentation. At the same time, technologies such as artificial intelligence (AI) and distributed ledger technology (DLT) are rewiring market infrastructure and eroding long-standing advantages. Capital and talent can now move faster than ever, increasing the risk that activity migrates to financial centres acting with greater clarity, ambition, and speed.”
While this should be obvious to all, UK policymakers have fallen short in supporting the advance toward digital financial services.
The authors warn that the UK must act urgently or risk eroding its leading position.
While predictions are typically incorrect, the report claims that if a cogent strategy is pursued it could add an additional £53 billion in economic output by 2035.
As for recommendations, the report advises the pursuit of five imperatives:
- Lead at the frontier of Fintech
- Tokenization, RWAs, crypto and stablecoins
- Fully digitize “high friction” processes like lending, home ownership
- Prepare for quantum
- Reset regulation and tax for the future of finance
- Taxes must be simplified and clarified. Taxes must be internationally competitive. Use “tax levers to support growth and incentivize activity.
- Regulations must be streamlined and simplified. Provide regulators and firms the support to innovate.
- Deepen international trade and investment
- Attract global talent. Build on major partnerships like with the US. Put digital market access at the core of trade deals
- Connect capital to national priorities
- Strengthen public and private capital access. Incentivize early stage, later stage investment with tax policy. Improve access to finance for SMEs.
- Build a nation of investors
- Simplify taxes and expand access to advice and opportunity.
The situation in the UK is described as moving too slowly today, and if current trends continue, growth will be moribund. Leadership is lacking, as regulation and supervision must be radically simplified.
“The UK’s financial and related professional services industry is a strategic national asset that cannot be taken for granted,” says Anne Richards DBE, Chair of Project Steering Committee and Chair of TheCityUK Leadership Council. “We are at a critical juncture. The message from industry leaders and stakeholders is clear: build on the positive approach in place to reform the system, but do it faster, with greater ambition and with targeted execution. It has never been more urgent for industry, government and regulators to act together to unlock growth and drive innovation. This is an industry that delivers value right across the economy and society. If successful, the UK will become more competitive and appealing for investment, businesses, and talent, benefitting people nationwide.”
Darren Ketteringham, UK Financial Services Leader, PwC UK, predicts that if action is not taken the financial industry will shrink.
Richard Baker, CEO & Founder of Tokenovate, echoed the concern, stating that action is needed, not prevarication.
“TheCityUK and PwC are right to call for bolder, faster reform to secure the UK’s leadership in global finance, as the UK has a narrow window to lead in digital finance. With tokenisation and programmable money moving from pilots to production, the UK now needs a dedicated, cross-government Digital Finance Committee to align policy, regulation and infrastructure. 2026 is the year the UK must turn ambition into implementation, or risk seeing innovation and influence move elsewhere.”
Taxes, or lowering taxes, are among the biggest tools policymakers have in their kit. Unfortunately, the current trajectory is heading in the wrong direction, focusing on short-term concerns over long-term relevance. A policy of “beggar the neighbors” should be instituted immediately. Make the UK the best place in the world for investors and creators to shoulder risk and remain.
The rule of law, which the UK already has, should be buttressed by regulatory clarity, and short deadlines for action are needed.
Digital finance is here. The UK can lead alongside the US. It just takes political decisiveness and leadership.
The actions outlined in this report are mutually reinforcing. Greater efficiency in regulation and tax creates the space for innovation; innovation expands participation by lowering barriers and improving access; broader participation deepens markets, builds resilience and scale; and scale, in turn, drives further efficiency. Together, these steps can unlock a step change in competitiveness, strengthen national resilience and deliver material downstream benefits across every sector the industry touches.
If the UK seizes this moment and delivers on the key imperatives outlined in this report the upside is considerable. PwC’s economic modelling estimates that the industry could generate up to £53bn in additional economic output by 2035. This is equivalent to a 1.6% uplift in national GVA beyond the base case, alongside corresponding gains in tax revenues and exports. This secures jobs across the country, strengthens household wealth creation, enhances access to capital for small businesses and supports growth in the sectors that depend on a competitive financial and related professional services system.
Success now depends on clarity, confidence and credibility in delivery. The UK must be prouder and clearer about what its financial and related professional services industry delivers: its global reach, its deep expertise, and its ability to drive growth and finance the everyday economy. The UK remains a place where world-class talent, ideas and capital converge. Reasserting that story at home and abroad is essential to stimulating the productive investment and sustainable economic growth the country needs, and supporting the financial goals and resilience of individuals and households across the UK.
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