During the months of July, August, and September business growth in the UK financial industry rose at the slowest pace since last year, and for the first time since March 2009 sentiment is dropping, according to recent surveys.
Unfortunately, growth in Britain’s financial industry is expected to continue slowing during the coming quarter, and financial firms are pessimistic about the possibility of increasing profits during the next couple months.
According to a poll conducted by the Confederation of British Industry (CBI), financial firms are expecting absolutely no growth in profitability for the first time in 24 months. The surveys were conducted between August 23 and September 8, and involved respondents from nearly 85 banks, fund managers, insurers, stockbrokers, and other financial firms.
The chief economic adviser for CBI recently told reporters that he believes the shift in sentiment is closely related to the uncertainty and instability of the current financial markets, primarily due to the global financial crisis.
About 10% of the United Kingdom’s national output is generated by the 900,000 employees of the financial sector. However, during the next three months experts expect British financial firms to reduce their employee count by at least 8000, continuing the recent trend that caused 1,000 employees in the financial sector to lose their jobs during the third quarter of 2011.
Many are of the opinion that the slowed financial sector growth can be attributed to the recent proposals of the Independent Commission on Banking (ICB), which now require British banks to insulate retail lending activities and store billions in additional capital. Being that the confidence of financial firms are directly affected by overall economic confidence, it makes sense that firms are cutting jobs and carrying a less than ideal outlook about the near future.