Financial services brace for more job cuts as clouds gather
Financial services firms are expecting a rapid increase in jobs losses over the coming months as investment plans and optimism levels sink to fresh lows.
The sector’s activity fell at the fastest rate since December 2023 in the three months to June, according to the Confederation of British Industry (CBI).
This marked the first time activity in the sector has decreased in more than a year.
A sharp drop in output at banks led to the downturns as businesses anticipated slower activity for the coming months.
Staffing across the financial services sector fell with the firms expecting an acceleration in job losses.
Morning Wire previously reported British banks were shedding workers at the fastest rate since 2018.
Total employee numbers at British lenders slumped 5.25 per cent to 580,371, falling to the lowest number in a decade, according to data from The Banker.
Standard Chartered and HSBC were responsible for the biggest culls after putting 4.5 per cent and 4.3 per cent of employees on the chopping block.
But woes are now expected to extend to the wider financial services sector as firms face the crunch of waning economic conditions.
Mansion House speech is a lifeline
Alpesh Paleja, the CBI’s deputy chief economist, said “conditions deteriorated” across the sector.
Paleja said activity is “projected to stabilise next quarter” but firms are still expected to shed workers and investments.
He said: “Firms facing continued economic uncertainty now will be looking ahead to the Chancellor’s Mansion House speech and to the autumn budget for reassurances, particularly that the burden of potential tax rises doesn’t fall squarely on their shoulders”.
The banking industry has eyed the Mansion House speech for a fleet of reforms to boost the sector’s international competitiveness.
Writing in Morning Wire, David Postings, the chief executive of banking industry body UK Finance, said the Mansion House speech offers Chancellor Rachel Reeves “a golden opportunity to move from growth ambition to action”.
Reforms to the ring-fencing regime and Financial Ombudsman Service (FOS) have been viewed as top spots for the Chancellor to bolster the banking sector.
Morning Wire revealed on Monday the Big Six lenders – Barclays, Natwest, Nationwide, HSBC, Lloyds, Santander – paid the FOS £38.8m in admin fees for the year ending March 31.