CBI survey jobs losses in financial services will rise sharply as profitability and business volumes slump.
Job losses in financial services will rise sharply in the coming months as profitability and business volumes fall at record rates, according to a survey from the CBI and PriceWaterhouseCoopers.
Business was lower across all customer bases in the past three months, particularly financial institutions and individuals. Meanwhile incomes fell heavily, and the cost of credit increased for a third consecutive quarter.
Job losses continued, and are set to accelerate in the next quarter. 99% of firms think that it will take more than six months for normal market conditions to return.
John Cridland, CBI Deputy Director-General, said: “One year after the credit crunch first took hold, business volumes and profitability in the financial sector have taken their hardest hammering yet. Firms have become more fearful about the extent and length of the credit crunch, and they are now looking to cut more jobs and scale back investment.
“The survey paints an increasingly bleak picture of the sector, but the dramatic turbulence across the world of finance over the past fortnight, and the renewed paralysis in interbank markets, will only have depressed market confidence even further.
“Difficulties in this crucial sector will have huge implications for the rest of the UK economy.”
Asked how their business volumes had fared in the three months to early September, 10% of firms said they had risen, while 61% said they had dropped. The resulting balance of -51% was much worse than expected, and was the weakest result since the survey started in December 1989. Volumes are expected to fall again over the coming three months, but at a slower rate (-31%).
Profitability in the sector declined at a record rate, as a balance of 49% of firms reported a fall, and this rate is set to continue over the next three months.
