Thrusday 9th October, 2014

According to the latest sector survey by the CBI and PwC, The UK’s financial services firms saw strong growth in business volumes in the three months to September, with profits rebounding and hiring on the up.

The survey reveals that business volumes grew at their fastest rate since 2007 and the momentum is expected to continue into the coming quarter. Rising volumes helped push up overall profitability, which bounced back after the previous quarter’s contraction, and business volumes are predicted to grow strongly again in the next quarter.

Looking ahead, firms say statutory legislation/regulation and competition are likely to be the biggest constraints on business over the coming year, while concerns about level of demand have dropped off sharply.

Rain Newton-Smith, CBI Director for Economics said:

“The spike in costs was off-set by a steep fall in the value of non-performing loans, suggesting that much of the fall-out from the financial crisis is now working its way out of the system.”

 “Worries about the impact of legislation at home and from Europe, such as new capital requirements and the prospect of a financial transaction tax, are also increasingly weighing on the sector.

However, with strong broad-based growth, are relatively upbeat about future prospects, despite some big geo-political risks that financial services firms remain on the horizon.”

Firms saw a return to hiring following last quarter’s unexpected fall in headcount, but this is expected to stabilise in the next quarter.