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Financial services sector 'looking positive'

17/10/13

The UK's financial services sector has endured a difficult few years but appears to be coming up swinging, with a new report from the Confederation of British Industry (CBI) and PricewaterhouseCoopers (PwC) highlighting the sector's growing confidence and positivity.

Optimism surged in the three months to September, as firms admitted to seeing more pluses in their business situation than they have done for almost 17 years.

A major factor in this improvement is employment - the number of people working in the financial services sector jumped by 24 per cent, the fastest rise since September 2007.

Furthermore, the CBI anticipates 10,000 more jobs being created in the third quarter of 2013, with an additional 2,000 coming in the final quarter of the year. This will bring the number of financial services jobs to 1.14 million as the sector continues to expand and recover.

"With optimism rising and jobs and profitability growing, this is an encouraging quarter for the financial services sector, despite a fall in business volumes in banking," said CBI director of economics Stephen Gifford.

However, anyone experiencing a fuzzy feeling of warmth and excitement about the industry's growth prospects needs to bear in mind the many problems continuing to hold it back from expansion.

Dealing with high levels of regulation "is increasingly weighing on plans for business expansion", concluded Mr Gifford.

Concerns have long been mooted that the government's desire to avoid any further financial crises could prevent the sector form enjoying strong levels of growth, with business leaders warning against an excess of red tape.

Amendments to the Banking Reform Bill have been introduced in a bid to ensure senior executives avoid serious misconduct.

The possibility of a referendum on EU membership has also caused ripples in the world of financial services, which has strong links with many European firms and banking groups.

Nevertheless, the minor economic recovery seen across the UK as a whole has been reflected in the banking industry's new-found buoyancy.

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