Profits up but Brexit cloud hovers over financial sector
Whilst profits and employment are up in the financial services sector, business sentiment amongst bankers continues to decline as Brexit uncertainty dents confidence in the future.
Mood among investment managers also in decline
The survey of 81 firms found that sentiment among bankers continued to decline while the mood among investment managers also deteriorated for the first time in more than a year.Among the challenges employers said they were facing were the need to adapt to digital skills, the ability of the education system to meet changing needs, and the ability to attract and import the best international talent.Even so, employment across financial services rose in the quarter to March and, against a backdrop of strengthening profitability, firms said they planned to increase headcounts further in the three months to June.Strong financial service performance in the last quarter
Rain Newton-Smith, CBI chief economist, said, “Financial services firms have performed well over the last three months, with business volumes and employment on the up and beating expectations.“But there is no escaping the rather large elephant in the room. Optimism has been flat or falling for over two years now – that’s nine quarters – something not seen since the Financial Crisis.“The Brexit transition that has been agreed between the UK and the EU will give financial services firms more reason to pause contingency plans, and to invest in the UK, but the Government must push energetically for the protection, maintenance and development of our world-beating financial services sector.“Looking to the longer-term, it’s clear that the sector needs to work hard to ensure the workforce has the digital skills necessary for maintaining the UK’s competitive edge, as well as to attract a younger, more diverse group of people and the very best international talent.”Opportunities among the challenges in the financial sector
Andrew Kail, head of financial services at PwC, added, “We are seeing a contradiction between a consistent trend of strong financial performance and weak levels of confidence about the future. The key question is: what looms that is worrying companies in the sector?“Brexit, with its transition timeframe now agreed, is just one of many factors financial services organisations are having to deal with. While December 31, 2020, is a welcome extension on March 31, 2019, it may not be sufficient to prevent companies planning for a hard Brexit until the shape of the landscape after 2020 becomes clearer.“Add to Brexit the high levels of competition, changing consumer preferences and behaviours, rapidly developing technological changes, the need to aggressively manage costs, and new regulation, collectively, it is denting confidence about the future.“While there are clear challenges, the sector is still full of opportunity for those businesses who keep a sharp focus on customers’ needs and provide high quality products and services, while embracing digital technology across all channels.”Read more about the big picture for business in the Winter issue of our magazine
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