Financial services report gloomiest outlook since 2008 crisis
Hiring increases in the face of falling optimism rounded off a mixed picture for the financial services sector in the quarterly survey run by the CBI and PwC.
The survey of 103 firms showed declining sentiment for the fourth consecutive quarter. A drop of 35 per cent in optimism about the overall business situation was the biggest of 2016 and the most severe decline since the financial crisis of 2008.
However, the number of new hirings in the sector was up seven per cent in the past three months and expected to be up 20 per cent in the months to March.
Profitability also looks set to increase, recovering from a slight dip in the past three months. Expectations for overall profitability in the next quarter were up by 37 per cent.
Building societies reported a generally negative outlook, against the prevailing trend. Hiring is projected to be down by 18 per cent, and the sector was the only one to expect a detereoration in profitability.
Brexit loomed large in the findings, with nine in ten banks listing exiting the European Union as their top challenge.
Rain Newton-Smith, CBI chief economist, said: “Ruling out membership of the Single Market has reduced options for maintaining a barrier-free trading relationship between the UK and the EU. Businesses will welcome the greater clarity and the ambition to create a more prosperous, open and global Britain, with the freest possible trade between the UK and the EU.”