- Dampened mood follows more than two and half years of optimism
- Slowing profit growth means firms don't plan to add employees
U.K. financial companies are less optimistic in their outlook as business increased at the slowest pace in two years, according to a survey by the Confederation of British Industry.
Profitability in the three months through August increased at the slowest pace since June last year, according to the study by the industry lobby group and auditor PwC published in London on Friday. Sentiment was unchanged after more than two and half years of “continuous improvement,” the survey of 115 companies this month and August shows.
Financial firms are contending with record low interest rates and increased spending on compliance and regulatory matters. The price swings that swept global markets from equities to commodities in the middle of the year amid concerns that China’s economy is slowing, have also taken their toll on investors and their brokers.
“The winds of volatility blowing through global markets have left a clear mark on the financial-services sector, impacting business volumes and investment intentions, particularly in investment management and securities trading,” Rain Newton-Smith, CBI director of economics, said in a statement.
While business growth will probably accelerate “a little” in the three months through November, profit growth will slow further and the firms don’t plan to increase employment, the study found.
“Business confidence among banks flat-lined in the quarter leading to September 2015, leaving the sector cautious over its short-term outlook,” Kevin Burrowes, PwC’s U.K. financial-services leader, said in the statement. “With interest rates expected to remain on hold, growth for U.K. banks continues to be challenging.”