New research claims confidence in the UK's financial services industry is falling at its fastest rate since the height of the 2008 crisis. Political uncertainty continues to “chip away” at the sector, threatening the City's international standing as overall employment within the sector has hit its lowest level for four years in March, said a survey from the Confederation of British Industry (CBI) and accountancy giant PwC. This remains despite the UK's historically low unemployment rate of 3.9 pc.
Rain Newton-Smith, the CBI's chief economist said that “alarm bells” about low confidence in the sector were now at a “deafening level.” She added, “Not only has it plummeted at the fastest rate since the depths of the financial crisis, it has been falling or flat since the EU referendum.” Newton-Smith reiterated the CBI's claim that Brexit uncertainty was now a “national emergency”. Should doubt about the UK's future relationship with the EU persist, it would “continually chip away at our economy and financial services sector,” she said.
Andrew Kail of PwC said that it “remained to be seen” whether or not the UK's financial businesses will “retain their current global footprint” amid such intense political chaos. There was a desperate need for “clarity” and “Certainty” if the UK was to hold onto its position as a pre-eminent financial centre. A separate research showed the profit growth of UK mid-sized firms being vastly outstripped by EU rivals. Gathered by consultancy firm BDO, the figures revealed that profits among UK mid-sized companies grew by 4pc last year, in sharp contrast with 19pc the year before. The 4pc growth in 2018 compared to 37pc profit growth among Spain's mid-sized companies, 30pc in German and 24pc in Italy.
The UK still has higher profits overall in this sector, which generates £114bn a year. This is more than the £93bn, £78bn, £54bn and £50bn generated by counterparts in Germany, France, Italy and Spain respectively. To be classed as “mid-sized”, firms must have a turnover between £10m and £300m.
