In other words, Turner's worry is that the UK has a financial sector that both takes up scarce resources and redistributes unduly between the millions of citizens that make up our nation. Implicitly, the UK's financial industries — including of course the City — are engaged principally in domestic transactions, in transactions between British people and companies. But has Turner got his facts right? Abundant data are available on the geographical split of UK financial business and, in particular, on the relative size of the City's foreign and domestic customers. This information demolishes Turner's argument. It turns out that the City of London is dominated by international transactions. 

Turner quotes extensively from a paper by Andrew Haldane, a senior Bank of England official, in a 2010 book The Future of Finance. According to Haldane, "In 2007 financial intermediation accounted for more than 8 per cent of [the UK's] total gross value added [i.e. output], compared with 5 per cent in 1970." It is this 3 per cent rise — this 3 per cent supposed over-expansion — that lies behind Turner's conjecture that finance has grown beyond "its socially optimal size".

If Turner or Haldane had checked what happened in this period to the UK's exports of financial services due mostly to the City's international business, they might have noticed that, as a share of national output, the UK's exports of financial services rose from less than 0.5 per cent in 1970 to 4 per cent in 2008. The most important driver in the growth of UK finance has been a boom in exports. Indeed, anyone employed in the City of London cannot help but be aware of the extraordinarily cosmopolitan nature of their work. Only a small proportion of the City's foreign exchange trading, securities underwriting and derivatives activity is in response to demands from UK companies. Instead the customers are predominantly multinational businesses from around the world, and that is why the fees, commissions, trading profits and so on are exports. 

The expansion of UK finance in the last 40 years has not been because of an increase in "distributive rent extraction". Turner and Haldane are talking rot. Moreover, if we were to rebalance our economy away from financial services, we would be rebalancing away from exports of financial services. The notion that manufactured exports are in some sense "better" for us is poppycock.