Banking and competition in the UK economy

This report explores the state of competition in the UK economy, and the extent to which supposedly competitive markets are delivering good outcomes for customers, with a particular focus on the retail banking sector. It sets out a range of policy recommendations for enhancing competition in the banking sector and the UK economy more broadly.

Done right, a renewed focus on competition policy in the UK could be a powerful lever for reducing the cost of living, enhancing customer service and driving up rates of innovation as businesses have to strive harder to retain and attract customers. In the case of banking, greater rates of lending to business, and access to business support, products and services – driven by a more competitive and diverse banking sector – could support economic growth, jobs and regional “levelling up”.

This research, sponsored by Metro Bank, presents updated analysis of industry concentration in UK consumer markets – refreshing analysis the SMF undertook in its 2017 report, Concentration, Not Competition. Whilst there have been some encouraging trends over time, particularly in the groceries sector and energy market, six of the eight markets listed above are moderately or highly concentrated in the latest available data, with a small number of firms accounting for a significant share of the market.

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