The Confederation of British Industry (CBI) in it’s last quarterly report of 2009 reported signs of green shoots in the financial services sector in the UK which is the first time in past 24 months. The joint study with Price Waterhouse Cooper found that 32% of companies in question volumes of business rise in the three months to early September, while 24% reported a decline.
These figures show a 7% positive swing accompanied by a more optimistic view of the overall economy, compared to the previous quarter. When questioned there was a positive response of +36% being more optimistic about the general state of business since last questioned in June, this going back a few years is the most positive outlook since March 2004 which stood at (+44%).
Delving deeper into the industry sectors the likes of securities traders and investment managers have seen strong volume growth over the past quarter, while retail banking and building societies are expecting to the growth the traders have seen in the coming months. This was in contrast to the responses from life insurers and insurance brokers who are still anticipating a fall in volumes however much less of a decline than that of previous quarters.
In addition to looking at business volumes, total operating costs (excluding cost of funds) have fallen for a balance of 17% of firms, and the report’s authors state “reduction in costs, while ongoing, appears to be on a decelerating trend”. The CBI’s chief economic adviser, Ian McCafferty, said: “Business volumes have increased, for the first time since the onset of the credit crunch, and a fall in running costs helped lift profitability.”
However, Mr McCafferty expects “further pain” in terms of job losses, stating: “The rate of job loss is expected to ease again next quarter, but this would still mark two solid years of falling employment within the sector.”
For more information visit the Confederation of British Industry website.
