No-deal threat hits confidence
CONFIDENCE among Britain’s “jewel in the crown” financial services sector has fallen at the fastest rate since the crisis over a decade ago.
Business volumes and profits are down and plans to launch new products and services have fallen away as firms “batten down the hatches” until Britain’s future relationship with the EU is resolved.
The CBI, whose survey with accountants PwC revealed a 15th straight quarter of flat or falling optimism, has again stressed the importance of avoiding a no-deal Brexit.
Financial services provided
1.1 million UK jobs last year, contributing £132billion to the economy and generating nearly
7 per cent of the UK’s output.
Over 40 per cent of financial services exports are to the EU and the sector has a trade surplus of more than £40billion.
CBI chief economist, Rain NewtonSmith, said: “Quarter after quarter, optimism continues to drop.
“Add to that the dive in volumes and profits over the last three months and it’s clear something has to change. The sector is the jewel in the crown of the UK’s world-leading services industry.
“The threat of a ‘no-deal’ Brexit is hitting confidence and the Government cannot ignore the voice of this bellwether of the domestic economy. It is one of the UK’s most important globally competitive sectors.”
The survey found optimism about the overall business situation fell at the quickest pace since September 2008. The greatest concerns were among banks and building societies.
The fall in business volumes was the sharpest since 2012, with the biggest drag from banks, where the downturn is the worst since 1991. Volumes are set to fall at a faster pace in the next three months.
This contrasted with “robust” growth for insurance brokers and investment managers. Another bright spot was the growth in employment across the sector, now at its fastest pace in over a year.
PwC’s Andrew Kail said: “Businesses will be reducing spending on training in the short term, as the focus moves from specialist skills to contingency planning.”