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Light at the end of the tunnel for finance firms

Light at the end of the tunnel for finance firms

Category: Economy

Updated: 05/10/2009
First Published: 05/10/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Hopes of an economic recovery have been raised by that news the financial organisations have seen a net rise in business levels for the first time in two years.

In the latest Financial Services Survey conducted by the CBI and PricewaterhouseCoopers, 32 per cent of firms said their business volumes had risen in the last three months.

Twenty four per cent said that their volumes had decreased during the period, meaning a net balance of seven per cent of firms saw an upturn.

While levels of business are still considered to be below normal levels, the results are a boost, coming after two years of falling volumes and profitability in the financial services sector.

It is the first increase the survey has recorded since September 2007, when a net balance of 23 per cent of firms reported growth.

"After nearly two years of exceptionally tough operating conditions, signs of a brighter outlook are appearing in the financial services sector," said Ian McCaffrey, CBI chief economic adviser.

"Business volumes have increased for the first time since the onset of the credit crunch, and a fall in running costs helped lift profitability. This is concrete evidence of the gradual path to recovery that firms were anticipating in our June survey of the sector."

While the signs of recovery are encouraging, figures show that there are marked differences between industry sectors. Securities traders and investment managers recorded strong growth in the quarter, while banks and building societies indicated growth was expected over the coming three months.

Life insurers and insurance brokers were not so positive, predicting falls in business volumes.

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