9th Jan 2025 05:55
(Alliance News) - Optimism among financial services firms has declined at the sharpest pace in more than two years, amid concerns that UK budget tax measures could weigh on investment plans, according to a survey.
Banks and building societies were nevertheless buoyed by stronger business activity in recent months, according to research by the Confederation of British Industry.
Levels of optimism across the financial services sector fell in December at the fastest pace since September 2022, the survey found.
This was despite firms reporting that growth in the volume of business – which can refer to the number of transactions – picked up over the past three months compared with the previous quarter.
This was primarily driven by banks and building societies who enjoyed a sharp uptick in business volumes in the final months of 2024.
The CBI surveyed 154 financial services companies, including banks, insurers investment and private equity firms, as part of its quarterly survey.
About two-thirds said there were factors likely to limit their investment over the next year.
Respondents highlighted concerns about the potential impact of measures in the autumn budget driving up costs.
The government's plans to hike employer national insurance from April, to raise more cash for spending, has been criticised by businesses that will face higher costs as a result.
Some of Britain's biggest retailers and employers have said they could slow hiring or reduce staffing levels to mitigate the cost hit.
This was reflected in the CBI's survey which found that headcount across financial services firms declined at a faster rate in the three months to December.
Looking ahead to the next quarter, the firms surveyed expect profitability to decline sharply, while headcount is expected to reduce at a similar rate.
By Anna Wise, PA Business Reporter
source: PA
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