‘Challenging' end to 2024 weighs heavily on financial services - CBI
Optimism in the UK financial services sector has collapsed, a survey showed on Thursday, despite growing business volumes.
The latest quarterly financial services survey from the Confederation of British Industry showed optimism fell at the fastest pace since September 2022. The weighted balance was -28, compared to -13 in September.
This was despite growth in business volumes picking up in the three months to December, with a balance of 32 compared to 6 in September. Respondents also expected a similar pace of growth in the current quarter.
But profitability continued to fall, albeit at a notably slower pace than the previous survey, and was expected to fall again, and at a far sharper pace, over the next three months.
Louise Hellem, chief economist at the CBI, said: "Financial services firms faced a challenging end to 2024, market by a record-fast decline in spreads and the quickest increase in non-performing loans over three years.
"These adverse conditions contributed to a fall in both profits and optimism, despite a pick-up in business volumes growth.
"The survey also highlighted widespread concerns among firms about the potential drag on investment from rising costs following the Budget."
The survey was carried out between 21 November and 9 December, with 154 firms responding.
A balance is the difference between the weighted percentage of firms answering that output is up and the percentage answering that it is down.