Tuesday 29 March 2016 12:04 am

Many UK businesses face a perfect storm, as uncertainty over a potential Brexit, a slowdown in China and the introduction of National Living Wage looms

It's not just the bank holiday's miserable weather that looked bleak, with many of the country's key employers predicting grey skies ahead as a perfect storm of economic uncertainty brews.

According to a report out today by the Confederation of British Industry (CBI) and PwC, optimism among financial services firms is falling at its fastest pace since 2011, with 35 per cent of financial services firms describing themselves as less optimistic than they were three months ago.

The feelings of doom and gloom persist despite business volumes in the financial service sector continuing to expand, employment increasing over the last quarter and profitability still improving despite slowing down. 

"Concerns over China and a volatile start to the year for markets, alongside uncertainty about a possible Brexit, have created a perfect storm to dampen optimism in financial services," said Rain Newton-Smith, director for economics at the CBI.

Kevin Burrowes, UK financial services leader at PwC, added: "Firms will have to play ‘business black jack' and decide the merits of whether they ‘stick’ ‘twist’ or ‘fold’. With uncertainties over the EU Referendum and global economy, the next quarter will be a challenging one for the financial services sector."

Those working in sectors such as retail and hospitality might find themselves struggling to balance extra costs onto their books as National Living Wage (NLW) comes into force this Friday, hiking the lowest rate of pay for workers aged over 25 to £7.20 per hour.

Last month, the British Retail Consortium warned that recent government policies, including NLW, could cost retailers as much as £14bn over the next four years, forcing them to lay off staff.

Retailers have already been battered this week, with footfall across UK high streets, retail parks and shopping centres dropping by as much as 10.5 per cent yesterday as the heavy Easter weekend storm put people off venturing outside.

Diane Wehrle, from Springboard, which compiled the figures, said: "Easter Monday is usually the best day of Easter weekend for high street retailers. However, as Storm Katie swept in, it seems shoppers have chosen to stay at home rather than venturing out into the wind and rain."

Retailers were also hit by dismal weather on Easter Saturday, with retail footfall down 6.4 per cent. The storm – which saw winds of up to 106mph, left flights cancelled, property damaged and thousands without power – is also likely to generate a hefty bill for insurers that could reach billions.

Rounding off the stormy week, the UK’s latest trade gap figures will be revealed on Thursday, with economists predicting it widened to £23bn in the fourth quarter of 2015, up from £17.5bn in the third quarter of 2015.

Howard Archer, chief economist at IHS Global Insight, said that the balance of payments could be an "uncomfortable development". "It could become an increasing problem if the markets lose confidence in the UK economy," Archer added.