Finance sector confidence falls

The financial services sector must be equipped to deliver for business amid Covid-19, after it saw optimism fall in the three months to March, according to a new report from the CBI/PWC.

The quarterly survey of 103 firms, conducted between 2 and 26 March, found that business volumes, profitability, and employment are all tipped to fall in the next quarter. Investment plans for the year ahead have also deteriorated. Optimism about the overall business situation in financial services fell sharply in the three months to March, to -41 per cent, albeit at a slower pace than some of the drops seen over 2019.

Business volumes were broadly unchanged in the period (+1 per cent), but expectations for the next quarter are for a marked decline (-30 per cent), the weakest predictions in a year.

Meanwhile, profitability fell slightly in the quarter (-4 per cent).

Rain Newton-smith, the CBI’S chief economist, said: “The bulk of the survey took place before social distancing measures were ramped up, but there were already signs of the Covid-19 pandemic leaving its mark.

“Financial services are already playing an essential role in helping companies with their cashflow… but like other businesses, they’ve also been struck by staff shortages and changes to how they operate.

“As a result, alleviating capacity pressures and streamlining how firms access government support through our financial institutions is vital. With the peak of the economic impact to come, equipping the sector to deliver for business is crucial in supporting the growth recovery beyond the pandemic.”

Andrew Kail, head of financial services at PWC, said the sector “must continue to work with customers, the government and the regulators to help the economy recover in the best possible shape”.