Daily Management Review

Optimism In UK Finance Industry Worst Since The 2008 Crash, Study Shows


The concerns and fears of the financial sector of the United Kingdom of the real possibility of a no-deal Brexit was reflected in a survey based study which showed that the optimism levels about the business outlook within the financial services firms in the country has touched a multi-year low and has dropped at its fastest pace since the last global financial crisis of 2008. The report was released earlier in the week in relation to the uncertainties surrounding UK’s exit from the European Union.
The survey, which was conducted by the Confederation of British Industry and accounting firm PwC, revealed that there has also been a drop in the business volumes among the 84 top financial firms that were polled in the survey at a rate that is also the fastest since September 2012.
In the last couple of months, UK Prime Minister Theresa May has been struggling get her withdrawal agreement – that had been rejected twice earlier, passed through the EU as well as by a very widely divided UK parliament. This latest report, which comes within such an uncertain political environment, reflected the gloomy mood of banks, insurers, fund managers and other financial firms.
The CBI/PwC survey said that the sharpest fall in growth was noted amongst the investment managers because of the tendency of investors to not make fresh investments but to hold on to their cash reserves when there is turbulence in the markets. The lone bright spot in the survey were the insurance brokers.
"The alarm bells ringing at the state of optimism in the financial services sector have now reached a deafening level," Rain Newton-Smith, CBI chief economist said.
The study also revealed that there was a drop in the growth rate employment through the financial services which was the fastest in the last four years. Apart for the impending uncertainty of a no-deal Brexit, the fall in growth in employment was also because of a shutting down of branches by the banking sector and the shifting of jobs by companies to other cities outside of the UK such as in Ireland, Germany and other EU cities with the aim of reducing costs.
Reports published in the media earlier this week quoting sources disclosed that about 300 London-based investment bankers were reportedly being pressurised by the United States banking giant JPMorgan to make them sign fresh job contracts which would include a clause of their agreement to shift to other cities in other parts of Europe in the case of a no deal Brexit.  The reports, quoting sources claimed that the contracts that the bank is pushing for demands the employees to relocate to an EU country in the event of a no-deal Brexit. There however have been no comments made on such reports by JPMorgan.