UK - New data suggests that the financial service sector could be on the road to recovery since 2000, albeit at a moderate pace.
According to the latest quarterly survey of 122 companies by the Confederation of British Industry (CBI) and consultants PricewaterhouseCoopers (PwC), business volumes have grown at the fastest rate for two and a half years. Some 43% of firms reported an increase over the past three months; building societies, banks, general insurance firms and finance houses reported the strongest growth during the last quarter.
Although levels of business are still -6% below normal, they are back to their pre-September levels, said the survey. Optimism among the sector also continues to rise, although by less than reported in the previous survey. Volumes are also expected to increase over the next three months, but at a more moderate rate.
PwC’s UK banking leader John Hitchins said: This latest survey shows that despite strong recovery in profitability, businesses remain cautious about the outlook.
“The industry is nervous about the overheated housing market and those sectors more heavily geared to the stock markets reported lower business confidence as a market recovery failed to materialise. CBI chief economic adviser Ian McCafferty said: This survey backs up the view that a global economic recovery is underway, but that the pace of growth over the second half of the year remains uncertain.
“As a result, we are now seeing the first signs of a turn in the investment cycle. However, looking forward, financial services firms still anticipate a modest, rather than rapid recovery. By Madhu Kalia
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