A major survey of the financial services sector showed a collapse in confidence across the industry in March, even before the full force of Britain’s lockdown measures came into effect.
The CBI/PwC survey saw only 12 per cent of firms say they were more optimistic about the overall business situation compared with three months ago, while 53 per cent were more pessimistic than they had been.
The survey, which was open throughout March, came before the economic standstill that has hit Britain since lockdown measures came into place.
Before Covid-19 hit, firms across the sector saw a slight fall in profits over the three months to March, but positive outliers were to be found in finance houses, insurance, and investment management.
Next quarter, profitability is expected to fall overall by 15 per cent across the industry.
Rain Newton-Smith, Chief Economist at the CBI, said that “like other businesses, (financial services firms have) also been struck by staff shortages and changes to how they operate.”
“With the peak of the economic impact to come, equipping the sector to deliver for business is crucial in supporting the growth recovery beyond the pandemic,” she added.
Firms also expected to cut back significantly their investment plans in land and buildings and marketing, with the latter cut to the greatest extent since March 2009.