Confidence still falling in financial services industry

Confidence across the UK's financial services industry has continued to deteriorate over the past three months, marking the longest period of falling sentiment since the financial crisis.

The latest Confederation of British Industry/PwC Financial Service survey shows that optimism in the overall business picture fell for the third consecutive quarter, with 28% of 115 respondents reporting a gloomier view, compared to 15% which were more optimistic.

Ultra-low interest rates and uncertainty surrounding the Brexit vote topped the list of concerns, as optimism fell for a third consecutive quarter in the three months to September.

The greatest deterioration in optimism was observed across building societies, investment managers and finance houses, the report showed.

The banking sector also marked a slight dip in sentiment, while optimism was relatively stable across the life and general insurance sectors.

Still, 48% of firms said overall business volumes expanded during the three months to September, compared to 22% who said volumes rose in the quarter to June.

However, growth is expected to "slow somewhat" over the next quarter, with only 25% of respondents forecasting a rise in volumes, though banks and building societies are expected to escape the slump.

Andrew Kail, UK financial services leader at PwC, said Brexit has been added to the list of challenges facing the service industry, including customer, regulatory and technological changes..

"It's still early days, and there is no real clarity on what future agreements will be reached. Consequently, many of our clients are considering their options, including potential restructuring and relocation of their businesses.

"However it's the domino effect on people, productivity and position as a financial hub that must be guarded against," he warned.