CBI/PwC Financial Services Survey

There has been a further decline in the confidence of UK financial services companies. Although volumes of business are growing in some sectors, there are also warning signs for firms. These include reported growth in non-performing loans and, for some, emerging concerns over funding.

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The survey shows a disconnection between weaker headline sentiment and stronger volumes of business. In part, this reflects contrasting predictions for the first quarter of 2012. The uncertain economic outlook means that some sectors of financial services expect business to grow, while others fear a drop-off in activity. This suggests that scenarios will play an especially important role in strategic planning during the coming year.

Overall levels of employment are declining, but companies should remember the impact of lower staff turnover on their headcount. There has been a worrying increase in the value of non-performing loans, but the banks and building societies have differing views on how this will develop. Market volatility is having an impact on some sectors’ ability to fund themselves, and many firms predict further deterioration in financial markets.

Concern about the impact of regulation is felt in every sector of UK financial services.  Costs of compliance are expected to continue growing, with investment managers facing a particularly busy year.

The CBI/PwC Financial Services Survey is a quarterly trends report that discusses the health, perceptions and plans of the UK financial services industry.

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