Business volumes in UK financial services increased at the slowest pace for two years in the three months to September, according to an influential study from PwC and the Confederation of British Industry.
According to The Telegraph, 25 per cent of firms said business volumes increased, while 21 per cent saw a fall, leaving a net balance of just 4 per cent – a huge slowdown from a balance of 44 per cent seeing growth in the previous three-month period.
The result is that firms expect to cut back on hiring for the rest of the year. While a net balance of 6 per cent of companies increased headcount in the past three months and a balance of 13 per cent did so in the quarter before that, the number planning to hire and either fire or freeze staff numbers over the rest of 2015 are evenly matched.
Finance firms are also cutting back on marketing spending – typically a sign that they are facing early signs of a squeeze on budgets. While a net balance of 58 per cent of firms said that they planned to increase spending on marketing three months ago, a net balance of 6 per cent now say they will cut back.
General insurers and insurance brokers saw volumes fall in the three-month period, while banks’ revenues from fees and commissions dipped.
Securities trading firms saw their business volumes fall, dragging down revenues for the first time since 2012, while investment managers suffered their worst quarter since 2009.
“Business confidence among banks flat-lined in the quarter leading to September 2015, leaving the sector cautious over its short-term outlook,” said Kevin Burrows from PwC.
“Recent macro-economic events such as the fall in oil prices, China’s Black Monday and the ongoing turmoil in global stock markets might have fuelled this sentiment. With interest rates expected to remain on hold, growth for UK banks continues to be challenging.”
However, some parts of the industry performed more strongly.
Building societies rebounded from a fall in business volumes in the previous three-month period, and life insurance firms’ business levels picked up sharply, with more expected to come in the next three months.
