Optimism among UK finance firms declines at fastest rate in two years, survey finds
Optimism among UK finance firms declines at fastest rate in two years, survey finds
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Optimism among financial services firms has taken a hit, declining at the fastest pace in over two years due to concerns that Budget tax measures could impact investment plans, according to a survey. Despite this, banks and building societies have seen an uplift in business activity recently, as per research by the Confederation of British Industry (CBI). The survey found that levels of optimism across the financial services sector fell rapidly in December, marking the sharpest decline since September 2022.
However, firms reported growth in business volume over the past three months compared to the previous quarter, primarily driven by banks and building societies who saw a significant increase in business volumes towards the end of 2024. The CBI's quarterly survey included responses from 154 financial services companies, including banks, insurers, investment and private equity firms. About two-thirds of these respondents expressed concerns about factors likely to limit their investment over the next year, with many highlighting worries about the potential impact of autumn Budget measures driving up costs.
The Government’s plans to increase employer national insurance from April, in order to raise more funds for spending, has faced criticism from businesses that will be hit with higher costs. Some of Britain’s largest retailers and employers have warned they may slow down hiring or reduce staffing levels to offset the cost impact.
The CBI’s survey revealed that the number of employees in financial services firms dropped at a faster pace in the three months leading up to December. Looking forward, the surveyed firms anticipate a sharp drop in profitability and a similar reduction in staff numbers in the next quarter.
