The quarterly survey conducted by the Confederation of British Industry (CBI) and PwC has found that financial services firms are optimistic about the business situation.
Conducted before the 2019 General Election – the result of which may have added more certainty, it could be added – organisations in the financial services sector are optimistic after 12 consecutive quarters were this wasn’t the case.
Optimism of those businesses surveyed rose at the fastest pace since June 2015.
Elsewhere in the CBI and PwC survey, sentiment was mixed by sector, with improvement driven by investment management, insurance broking and general insurance.
For banks and building societies, optimism was flat, while in finance houses and life insurance, it actually fell.
Business conditions, according to the CBI and PWC survey are still challenging though; in the three months to December, business volumes fell further, which means it’s now a full year in which they haven’t risen at all.
Banking and investment management are the sectors causing the greatest drag on growth.
Looking ahead though, overall business volumes are expected to return to growth – the strongest expectations since March 2018.
Rain Newton-Smith, CBI Chief Economist, called on the government to ensure stimulation of the sector.
“It’s great that optimism has risen following four-and-a-half years of dire sentiment, with financial services firms also suggesting that an end to falling business volumes and profitability may be in sight.
“However, the sector isn’t quite out of the woods yet. Against the backdrop of another fall in business and profits, Brexit uncertainty continues to drag on investment plans, and concerns over labour shortages have spiked.
“As the UK begins a new future outside the European Union, the government must do everything it can to support and stimulate one of the UK’s most globally competitive sectors, so that expectations of an upturn can come to pass – both over the next quarter and beyond.”