Fi­nan­cial ser­vices count cost of jobs and profit hit af­ter un­prece­dented down­turn

The Daily Telegraph - Business - - Business - By Michael O’Dwyer

FI­NAN­CIAL ser­vices com­pa­nies suf­fered their sharpest ever down­turn in the sec­ond quar­ter of the year as the coro­n­avirus pan­demic piled pres­sure on jobs and prof­its.

As many as 62pc of firms were hit by a slow­down, with just 10pc re­port­ing an in­crease in vol­umes, ac­cord­ing to a sur­vey by ac­coun­tant PwC and the Con­fed­er­a­tion of Bri­tish In­dus­try.

Build­ing so­ci­eties and gen­eral in­sur­ers sell­ing prod­ucts such as car and travel cover were hit by the steep­est drop in busi­ness vol­umes, with falls of more than a third in both in­dus­tries.

The out­look for the next three months is sim­i­larly gloomy. Only a fifth of firms say they are more op­ti­mistic about the fu­ture than they were three months ago, com­pared with 45pc who say they are less op­ti­mistic.

An­drew Kail, head of fi­nan­cial ser­vices at PwC, said: “While the fi­nan­cial ser­vices sec­tor has been hit less hard than in­dus­tries such as re­tail, it is no sur­prise to see lev­els of op­ti­mism de­cline. Busi­ness vol­umes and mar­gins have in­evitably fallen as cus­tomer de­mand has waned.”

The in­dus­try suf­fered its big­gest hit to prof­its since the fi­nan­cial cri­sis as a bru­tal re­ces­sion sent de­faults surg­ing be­cause hard-pressed bor­row­ers strug­gled to pay their bills.

Em­ploy­ment fell at the fastest rate since 2010 as 38pc of firms cut jobs.

The av­er­age busi­ness put 8pc of staff on the tax­payer-funded fur­lough scheme.

More than half of com­pa­nies suf­fered a fall in prof­its, and busi­nesses pre­dicted the next three months could be al­most as dif­fi­cult.

Al­most all firms can adapt to so­cial dis­tanc­ing mea­sures – with many al­low­ing staff to con­tinue work­ing from home – but ab­sences due to school clo­sures and trans­port prob­lems were iden­ti­fied as the big­gest oper­a­tional chal­lenges.

Nearly two thirds of busi­nesses plan to speak to land­lords about cut­ting of­fice space as the prop­erty sec­tor braces for a fall in de­mand now com­pa­nies have em­braced re­mote work­ing.

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