The UK’s financial services sector has suffered a further dip in confidence as competition in the market has grown to the strongest level for nine years.
CBI/PwC’s latest quarterly financial services survey found banks, securities traders and investment management firms were less optimistic about the general business environment than they were three months ago.
Concerns about demand, slowing profits growth, higher costs, greater competition and the outcome of the upcoming EU referendum all played a part in subduing confidence.
CBI chief economist Rain Newton-Smith said: “There’s a mood of caution amongst financial services firms with the vote on our EU membership rapidly approaching and global economic waters still choppy.
“When talking to financial services firms, it’s clear that the low interest rate environment, increasing competition and regulatory pressure continue to weigh on profitability.
“But after a volatile start to the year there are some positive signs, with business volumes continuing to expand and overall employment levels holding up.”
Andrew Kail, UK financial services leader at PwC, said a healthy financial services sector was hugely important:
PwC research has estimated that finance and insurance generated £65 billion in export earnings last year, nearly £2,500 per UK household.
He said: “Technological advances are proving to be game changers, and increasing competition is causing industry heavyweights to overhaul how they respond to changing customer needs.”