Growth Slows in Financial Sector.
Many businesses in the UK financial sector have continued to grow over the past three months, though at a slower pace than the previous three quarters.
Business volumes varied widely for many, and while 44% witnessed growth, 28% reported falling business levels. The resulting rounded balance of +17%, which was less than the projected +30%. Business growth is expected to slow further over the next three months to the slowest expectation since December 2009.
Ian McCafferty, CBI Chief Economic Adviser, said: “The financial services sector continued to recover over the past three months, but with slower volume growth, following three stronger quarters.
“Despite sharper cost increases and a small rise in non-performing loans, firms’ profitability continued to improve with growth in volumes and incomes, and a slight widening of spreads.”
However, there was an unexpected rise in employment, especially in the financial services sector which increased at its fastest pace since June 2007.
This was reflected in the increase in staff costs as a proportion of total costs. The figures also indicate that firms intend to invest more over the coming year on IT, land and buildings in a bid to increase efficiency and speed
Although staff levels have risen, many businesses still continue to worry about the availability of professional staff.
The Financial Services survey, conducted by the CBI and PwC also illustrated the concerns of many over the worsening economic climate, and many believe that ‘normal’ economic conditions will only return after six months.
Andrew Gray, UK banking leader at PwC, said: “Concerns about economic recovery and demand have caused a dip in the banks’ confidence while, for the first time in a year, business volumes are dropping off.
“The fresh wave of cost reduction plans announced recently is a sure sign the banks are keenly aware of the need to improve profitability.”