CBI reports signs of growth in UK financial services

In its latest quarterly survey, the Confederation of British Industry (CBI) has reported signs of growth in the UK financial services sector, for the first time in two years.

The study, which is carried out in conjunction with PricewaterhouseCoopers, reveals that 32% of firms questioned saw business volumes rise in the three months to early September, while 24% reported a fall.

The positive balance of 7% was accompanied by a more optimistic view of the overall business situation, compared to the previous quarter.

A balance of +36% of firms were more optimistic about the general business situation than in June, the most positive outlook since March 2004 (+44%).

However, differences remain between individual industry sectors with securities traders and investment managers seeing strong volume growth over the past quarter, while banks and building societies “expect that growth will resume over the next three months”.

“By contrast, life insurers and insurance brokers anticipate further, albeit slower, falls in business volumes”, the report states.

Meanwhile, total operating costs (excluding cost of funds) fell for a balance of 17% of firms, and the report’s authors conclude that “reduction in costs, while ongoing, appears to be on a decelerating trend”.

The CBI’s chief economic adviser, Ian McCafferty, says: “Business volumes have increased, for the first time since the onset of the credit crunch, and a fall in running costs helped lift profitability.”

However, Mr McCafferty expects “further pain” in terms of job losses, stating: “The rate of job loss is expected to ease again next quarter (a balance of -21%), but this would still mark two solid years of falling employment within the sector.”

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