Economic uncertainty clouds financial sector pick-up

Optimism over the country's business environment fell again slightly across the UK's financial services sector in the three months to September, despite an increase in business volumes and expectations of a stronger quarter ahead, according to the latest Financial Services Survey.

CBI and PwC study finds positive investment intentions

The survey of almost 100 firms, conducted by the Confederation of British Industry (CBI) and PwC, found that the trend in declining optimism continued on the downwards path first detected early in 2016, albeit at a slower pace recently, with banks and building societies markedly more pessimistic than those working for finance houses, life insurers and investment management firms.Growth in business volumes over the three months slowed in comparison with the pace in the first half of 2017, but the overall level was deemed to be normal for the summer period, with profits improving for the third successive quarter.Both business volumes and profits are expected to pick up in the coming quarter, with employment levels – which remained stable over the summer – forecast to increase.

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The CBI added, “Investment intentions for the year ahead have improved significantly, with marketing budgets increasing, investment in IT anticipated to rise at the fastest pace in two and a half years, and planned investments in land and buildings rising for the first time since 2014.”Rain Newton-Smith, chief economist at the CBI, said, “It’s encouraging to see volumes and profitability continuing to expand for most financial services firms, with hiring expected to pick up and investment intentions improving.“While demand in the sector is expected to hold up in the near-term, we can’t ignore the fact that optimism has dropped in almost every quarter for the past two years.“With Brexit uncertainty affecting the wider economy, it’s vital that substantive progress is made during the next round of Brexit negotiations, so that transitional arrangements can be agreed and businesses can make decisions now about investment and employment that will affect economic growth and jobs far into the future.”

Finance sector reaches Brexit crossroads

Andrew Kail, head of financial services at PwC, added, “This quarter’s survey finds levels of employment stabilising for financial services firms, and almost two thirds will boost their IT spend – it’s clear that sector activity marches on.“However, the financial services sector is at a crossroads. The way ahead is uncertain, particularly as Brexit negotiations are yet to be resolved. A co-ordinated action is now required by government, financial services firms and regulators to ensure the continued future success of the industry and its customers.“Specifically, the UK’s regions must also be given every opportunity to flourish as domestic and specialist financial services centres. Above all, efforts must be maintained to retain and increase trust among customers.”The report found that there was a growing appreciation in the sector of the need for action to maintain the UK’s position as a leading FinTech and innovation centre, along with the need to preserve access to international talent. Read all the latest relocation news in ourAutumn 2017 magazine.For related news and features, visit our Enterprise section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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