Storm warning for UK's finance sector - PwC/CBI
Financial services firms' confidence in the UK economy has fallen at its fastest rate since 2011, according to the latest CBI/PwC Financial Services Survey.
Uncertainty surrounding this year's EU referendum and a slowing market in China are just two of the elements that have combined to create "a perfect storm to dampen optimism in financial services", said CBI Director for Economics, Rain Newton-Smith.
She said: “As we know from talking to CBI members, now that the referendum date has been set some investment decisions have been put on hold by some firms."
The quarterly survey of 104 financial services firms found that 14% were more optimistic and 35% were less optimistic, giving a balance of minus 21%, against the 24% dip in December 2011.
The poll shows that the banks are by far the most concerned, as a figure of minus 48% indicates the sharpest drop in confidence since the global downturn in 2008/09.
Banks, life insurers and investment managers see volatile markets as one of the key causes for concern in the year ahead, along with competition from within the sector and macroeconomic uncertainty.
Kevin Burrowes, UK financial services leader at PwC, said that the survey shows a "cloud forming across the sector" which is "getting darker".
However, it was not all doom and gloom.
Across the financial services sector overall, business volumes rose quicker than expected and are set to continue to rise into next quarter. There was a reported rise in employment across all sectors with the exception of banking, with overall employment forecast to remain steady for the next three months.
Although profits grew on the whole, it was at the slowest rate for almost two years, with banks and life insurance producing the most noticeable decline. Even at that, the profits that have been reported are a result of a falling cost.
The investment management sector suffered a dramatic slow in profits over the last three months, but this is expected to turn around next quarter, the survey said.