Brexit has had a stronger impact on Britain’s financial sector than the global financial crisis, according to a survey reported by Reuters.
Although the financial crisis sent some of the world’s biggest banks into collapse and plunged economies into recession, a quarterly poll by CBI and PwC found that optimism in the sector is at levels not since 2007-2009 and that declines in optimism have been more sustained than at that time.
The low levels of optimism were in spite of growing business volumes and growing employment in the quarter ending March 2018, and firms reporting that they plan to recruit more staff in the next quarter.
Rain Newton-Smith, chief economist at CBI said: “Financial services firms have performed well over the last three months, with business volumes and employment on the up and beating expectations. But there is no escaping the elephant in the room.”
An agreement between the UK and EU to put a transition period in place has quelled concerns in the sector somewhat, but it is still unclear how Brexit will impact access to EU markets from 2020.
PwC head of financial services Andrew Kail said firms were struggling with strong competition, changing consumer behaviour, rapid technological change, new regulation and increased costs. Kail said: “Collectively, it is denting confidence about the future.”