Activity in the UK’s financial services sector has grown for the second quarter in a row, according to a new report.
The study by the Confederation of British Industry (CBI) and PricewaterhouseCoopers (PwC) revealed that in the three months to December 2010, activity grew strongly. However, profitability did not increase as fast as expected, growing at the slowest pace for 18 months.
John Cridland, CBI director-general designate, said: "Activity in the financial services sector grew strongly over the second half of 2010. But firms see growth slowing over the coming three months, and expect another fairly moderate increase in profitability.
“"Numbers employed have fallen significantly and investment plans have weakened since September. This probably reflects renewed cost control given little growth in incomes and slower growth in profitability.”
Business volumes for all sub-sectors of financial services grew in the last quarter, apart from banking where volumes remained flat. According to the Financial Services survey, which asked businesses how they fared in Q2, 50% said that volumes increased, while and 23% said they fell.
Cridland added: "Business conditions vary across financial services sub-sectors, however. Whereas the banks expect business volumes to remain subdued next quarter, securities traders and investment managers have fared much better and are continuing to take on staff.
"Growth in business with private individuals in the last quarter may well reflect households continuing to strengthen their finances. But looking ahead to the next quarter, commercial business is expected to increase significantly."
© Crimson Business Ltd. 2011