Finance sector optimism waning despite rising profits

The UK financial services sector saw a booming second quarter of the year, but falling optimism about future prospects was reported in a survey of 94 of the country’s top firms.

In the report carried out by the CBI and PwC, increasing fears surrounding issues such as the macroeconomic environment and political uncertainty caused by Brexit have caused a further deterioration in sentiment over the most recent quarter.

Optimism within the industry has been on a steep decline during the last 18 months, roughly coinciding with the vote to leave the European Union last June.

However, financial firms did see growing business volumes and profits, as well as an increase in employment during Q2 2017.

Optimism within the industry has been on a steep decline during the last 18 months

Investment management and insurance companies had a particularly strong quarter in terms of profitability and volumes, but banks saw a 31% decline in optimism during the three-month period.

Andrew Kail, head of financial services at PwC, said: “Currently the financial services sector is performing well in both business volume terms and underlying profitability. However, another quarter of falling optimism points to an industry harbouring concerns about the future.”

Despite the Brexit concerns, Kail added that the UK will maintain its status as a key financial hub, but will be faced with difficult challenges.

"The UK will continue to be a leading financial centre, but political uncertainty and the ongoing wait for an agreed Brexit blueprint are fuelling more questions about companies' futures and the performance of the wider economy,” he added.