Financial Service Firms Across The UK Are Confident Of Growth, According To The CBI

Financial service companies in the UK are confident business volumes will continue to rise after positive results.

A survey of 98 firms across the country has found that many companies in the financial sector saw their orders rise.

However, there was a surprise fall in overall profitability, which came after six quarters of robust growth.

Firms were hit by a rise in wholesale costs across a number of verticals, but the Confederation of British Industries (CBI), which conducted the survey, said that this would likely be an anomaly followed by a better performance.

Matthew Fell, CBI director for competitive markets, said: "Despite a surprise fall in profitability, financial services firms are upbeat about their prospects, with business volumes rising across most sectors.

"Firms are focusing on two key strategies for growth in the near-term: finding ways to retain existing customers, by offering them more products and services, and investing in marketing, sales and distribution to attract new customers."

However, Mr Fell believes that many financial service companies - especially SMEs - have significant challenges on the horizon.

The CBI believes that regulation will have an "adverse" effect on companies and could restrict growth.

Earlier this month, the CBI released data that showed the UK's overall economic recovery is set to continue at a "brisk pace".

A survey produced by the organisation found that 41 per cent of respondents - decision makers at the UK's biggest companies - believe that their output will increase in the third quarter of 2014.

Katja Hall, CBI deputy director-general, believes that the UK is returning to its pre-recession peak and would grow from its 2008 levels in the coming months.

However, once again, the CBI warned there are a number of issues that could disrupt or derail this recovery, including rising oil prices, difficulties in some areas of the Middle East and Russia's incursions into Ukraine.

Expert Opinion

It is interesting to see the financial services sector become the latest in a string of areas, including manufacturing, to report rising levels of confidence. This positivity will be particularly welcomed by smaller businesses in the area, which will be looking at what their future holds and how they can work to achieve their ambitions. <br/> <br/>"These findings suggests many entrepreneurs and growing firms will be assessing their next steps and how they intend to take advantage of the opportunities which such confidence brings. <br/> <br/>"We would urge businesses to speak to legal advisors in order to get support on the key issues they need to consider when plotting their next step." Steven Beahan - Partner