CBI survey suggests financial sector picking up

| June 29, 2009 | 0 Comments

A quarterly survey from the CBI suggests that the UK’s beleaguered financial services sector is on a “gradual” road to recovery.

While the organisation warned of considerable job losses and cuts to investment, there are indications that the sector is emerging from the worst of the downturn.

The CBI also cautioned that the situation remains challenging for banks with growing debt levels but financial services firms are now more positive than they were two years ago.

According to the CBI, in the three months to June, incomes and profitability declined - but a lower rate and business volumes are expected to rise in the third quarter.

Of the firms polled, almost a quarter (22%) said business volumes had risen in the three month period, while half said business volumes fell.

The balance of 28% seeing contraction was less than the 47% seeing a fall in the first quarter of the year.

CBI chief economist, Ian McCafferty, said: “Having seen business volumes tumble continuously for 21 months, some parts of the financial services sector look like they may be starting to come through the worst.”

Meanwhile, CBI director general Richard Lambert, said: “The harshest period of the recession looks to be behind us.”

The CBI is predicting that the economy will contract by 3.9% over 2009 before seeing a slow, gradual return to growth of 0.7% next year.

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