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UK financial services downturn worsens in Q3, but outlook brighter
(Sharecast News) - Activity in the UK financial services industry has dropped by the sharpest rate in more than five years, according to a survey from the Confederation of British Industry on Thursday. Business volumes fell at their fastest pace since June 2020 in the third quarter, with the net balance of business volumes - those reporting an increase minus those reporting a decrease - dropping to -36% from -24% in the second quarter.
Despite the negative headline, sentiment was more or less flat at a net balance of +3 after sinking to -52% three months earlier, with the balance of firms expecting an increase in volumes in the fourth quarter at +37%.
Average spreads declined at a faster rate (-47% from -22%) but this is predicted to improve to -23% in the fourth quarter.
The headcount net balance dropped to -24% from -7% but this is expected to ease to -7% over the coming three months, while investments in IT over the next 12 months were pointing up.
"Whilst challenges remain, there are shoots of potential economic momentum for the financial services sector heading into Q4," said CBI's chief economist Louise Hellem.
"Harnessing this momentum will depend on the decisions the government makes during the forthcoming Budget, with the CBI's message clear: there can be no further tax rises on business."
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