Firms pessimistic about profitability says CBI
The Confederation of British Industry (CBI) has said that financial services firms expect a "squeeze in profitability" in the next quarter in spite of rising business volumes during the last three months.The Financial Services survey conducted by the CBI and PricewaterhouseCoopers LLP says that business volumes had grown at their fastest rate in seven years adding that employment in the sector was also on the rise.However it states that while a positive balance of 51 per cent of the firms surveyed reported rising business volumes, only a balance of plus three per cent expected volumes to grow over the next quarter. Such a weak outlook has not occurred since September 2004.CBI chief economic adviser Ian McCafferty said: "In recent times, the strong performance in the UK financial services sector has given a considerable boost to the rest of the economy."In the three months to June, the sector saw another quarter of keen growth, with the volume of business increasing at its fastest rate in over seven years. Job creation and profitability gains have continued, while average costs have fallen."He added that activity in the sector may be "starting to come off the boil" as the outlook is of flat business volumes, falling income values and lower profitability. The adviser stated that while this could be a temporary soft patch it could also be a reflection of the "impact on financial markets of recent rises in global interest rates".The CBI states that while demand from financial institutions and industrial and commercial companies is set to remain strong, a sharp dip in demand is expected from private individuals and overseas customers.The anticipated falls in incomes and near-flat volumes mean that analysts expect profitability growth in the past quarter (a positive balance of eight per cent) to reverse in the next three months, with a positive balance of six per cent of firms predicting a fall in profits.
Share this..
Related stories
UK unemployment falls for 26th month in a row
2101/2015 UK unemployment has fallen even further to 1.9 million, its lowest level for more than six years, according to the Office of National Statistics (ONS). In the three months to November, UK unemployment fell by 58,000. The unemployment rate now stands at 5.8% of the adult working population. In total, there are now 30.8 million people in work. Thanks to this, the number of people...
Read MoreBank Of England Move To Calm Markets
As the UK stock markets fills with rumours that the Bank of England is set to move interest rates higher, Mervyn King has stepped in to try and take some heat out of the situation. Sitting in front of a Commons Select committee, investigating the credit crunch and the ongoing economic woes of the UK, King was asked a number of questions from the future direction of the housing market, the inflati...
Read MoreUK car industry in disarray
Figures showing a 51.3% slump in car manufacturing in the UK in the year to March 2009 have perfectly highlighted the ongoing difficulties being felt by the sector. Coming on the back of February figures which showed a 59% fall for the 12 month period it appears as though the UK car economy is in a dire situation but possibly showing signs of stabilisation.
Many car manufacturers ar...
How could we have avoided this latest economic slowdown?
As the slowdown spreading across the worldwide economy continues to bite deeper into each and every country many people are starting to ask what could have been done differently, how could we have avoided these troubles and more importantly who is to blame?
The fact is that we are all to blame in a small way because we as consumers led the credit based spending spree, we pushed hous...
Public spending in UK set to suffer
The £50 billion deal which has been announced today will see the deficit for the public purse rise to near £100 billion for the current tax year with a further rise expected next year. This will see UK debt rise to over £600 billion and place severe pressure on public spending for the next decade. Much of the money which has been lent and wasted over the last decade will need to be repaid whi...
Read More