Britain’s financial sector is expected to lose 15,000 more jobs over the next three months, the Confederation of British Industry (CBI) says, following publication of its latest statistics on the sector.
The sector was hit by record drops in income levels over the past quarter, while business volumes have continued to fall sharply, according to the the Financial Services Survey by the CBI and PricewaterhouseCoopers (PwC).
The survey, which polled firms in the sector, notes that as companies are trimming costs and alleviating steep falls in profitability, jobs are being cut at the fastest rate since 1993.
Almost half of the respondents (45%) expect further deterioration in financial marked conditions. Last December, only 18% thought this was going to be the case.
In the latest survey, every respondent said it would take more than six months for the market to recover. Meanwhile, two-thirds said that Britain had become a less competitive financial services centre.
Only 9% of firms said their business volumes rose, while 56% said they fell. The latest figures are worse than expected, and with a 47% fall, they mark a sixth quarter of steep decline.
The survey also reveals that 47% of firms experienced a decline in profitability. This reflects a slight easing back from December’s record drop of 55%. Over the next three months, respondents expect profitability to fall another 27%.
The survey continues that the values of business volumes and profitability fell at the fastest rate ever since the survey was first carried out in December 1989.
More than half of the firms (54%) reported falls in net interest, investment and trading incomes, according to the survey, and 53% reported a drop in fee, commission and premium incomes. Both measures are expected to fall further over the next three months, though the latter is predicted to drop at a slower rate.
According to the survey, business was lost in all categories, and investment intentions have hit record lows as firms are uncertain about demand.
Business sentiment also dropped again, the survey says. Some 34% are now less optimistic about the overall business situation in the financial services sector than they were in December.
Average spreads narrowed for the first time since December 2007; 6% reported a reduced gap between the rates at which capital is borrowed and lent. Meanwhile, the value of non-performing loans (“bad debt”) increased further.