Business volumes across the financial services sector in the second quarter grew at its fastest pace since June 2017, after stalling in the previous quarter.
Growth in business volumes across the financial sector in the second quarter was at 40 per cent, its fastest pace since June 2017, and is expected to continue in the next quarter, according to the results of a survey by the Confederation of British Industry (CBI) and PwC.
Optimism improved in the three months to June, but to a lesser extent than the previous quarter, marking the fourth consecutive quarter of rising sentiment.
The survey, of 118 respondents in June, found that profitability also grew at the fastest pace since December 2015, and is set to grow at a slightly slower rate over the next quarter.
Employment grew for the first time since December 2019 after falling for five consecutive quarters previously.
Banking was the only sub-sector where employment declined. Overall, headcounts across the sub-sectors are expected to grow at a faster pace in the next quarter.
“Growing business volumes across the sector is good news, especially when combined with rising profitability and employment,” said Rain Newton-Smith, CBI chief economist.
“The mood music is positive,” agreed Isabelle Jenkins, head of financial services at PwC UK, pointing to growth in business volumes, combined with a rise in employment in most financial service sectors and the flatlining in non-performing loans.
Regulation, Newton-Smith said, remains the main driver of disruption. “This is sparking positive shifts in operating models – notably through greater tech adoption. However, firms are continuing to adapt to the absence of an equivalence agreement between the UK and EU, as recognised by the Chancellor’s Mansion House speech,” she said.
Investment is set to be cut back on land and buildings as well as vehicles plant and machinery in the year ahead while IT spending is set to increase, with expectations at their strongest in nearly two years.
Newton-Smith said the growing demand for digital skills should feature strongly in the government’s future plans for retraining and reskilling workers most affected by the pandemic.