Financial services “gloomy” as confidence dips to lowest level since 2008

Confidence amongst financial services firms dipped heavily in the fourth quarter, making 2016 the “gloomiest year” for the sector since 2008.

The Confederation of British Industry (CBI) and accountants PwC found that 45 per cent of the 103 financial services companies surveyed were less optimistic in the fourth quarter of the year than in the quarter before, with only 10 per cent who said they were more optimistic.

The survey showed confidence fell for the fourth consecutive quarter in the three months to December, making the longest run of declines since 2008. The figure comes as many bank consider moving abroad in the wake of Brexit, in order to retain passporting rights in European countries.

The report said that “An overwhelming number of banks (over 90 per cent) saw preparing for the impact of Brexit as the number one challenge, but this was not the case in any other sector.

“Building societies were most concerned about macroeconomic uncertainty, while the level of competition was by far the biggest concern in the three insurance sub-sectors.

“Investment managers cited a broad range of challenges, with combating security threats ranked highest.”

However the survey is likely to be at odds with official growth data for the October to December period, set to be published later this week. It is expected that UK growth will continue to outperform expectations, despite pessimism in the finance industry.

Andrew Kail, head of financial services at PwC, said: “Uncertainty has contributed to the low levels of optimism reported by many financial services companies, particularly by the banks.”

The pound outperformed most currencies in early trading on Monday, as the dollar suffered in the wake of Donald Trump’s protectionist inauguration speech. Sterling was up 0.54 percent against the dollar at 1.245, and 0.36 percent against the euro at 1.160 (1005GMT).