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The Financial Services Sector Is Cautiously Optimistic, But Risks Lie Ahead

Some recent details from the UK´s financial services sector suggest that these businesses are becoming more optimistic about the future. However, there are still uncertainties ahead that are causing concern.

The CBI Survey Shows Positive Signs

The Confederation of British Industry (CBI) carried out their quarterly survey in the first half of September. They found that financial services companies, banks and building societies had suffered a drop in their profits.

However, this was partially countered by the fact that they earned more money from investment management and insurance in the period. Among the encouraging signs were the fact that employee numbers dropped less than in the previous quarter, with further improvement expected in the next survey.

However, worries about the post-Brexit trade situation and whether the coronavirus pandemic will worsen are still causing concerns. This partly explains why investment, excluding new technology, is expected to decline in the next year.

Rain Newton-Smith is the chief economist for the CBI and she stated that it is “reassuring to see business volumes begin to stabilise” in this vital sector of the economy. Despite this, she also pointed out that the financial services industry “isn’t out of the woods just yet”.

The current crisis has affected other areas, such as hospitality and tourism, more than financial services. Yet, there are still reports of financial companies turning to the debt collection process to get through this tough period unscathed.

Businesses Looking for More Home Working

The CBI also teamed up with PwC, to look at the issue of the growth in home working seen this year. They found that a lot of big companies are currently looking at the issue of office space, due to the number of workers who are now carrying out their roles remotely.

The results confirmed that 74% of businesses in the financial services sector are in the process of reviewing the amount of office space that they need going forward. The majority of them will be looking to lose some of their existing space and possibly use their remaining offices differently.

This follows on from recent government advice for staff to work from home if possible, with other surveys confirming that more people will be doing this permanently in the future.

Some of the country´s biggest companies are planning to continue with remote working from now on, as the CBI survey revealed that 88% of the businesses that responded have shifted to home working. Half of these companies said that the majority of their employees can now stay at home to work.

This has led to increased investment in IT infrastructure, but the overall picture is of jobs being reduced at the same time. While surveys have shown that people are generally more productive when working from home, one major area of concern is that city centres could become deserted if this trend continues.

Despite this fear, the CBI believes that home working is here to stay, as many companies appear to now be convinced of the benefit in doing this.