Businesses are cheering the results of a survey by PwC and the Confederation of British Industry (CBI) that claims trade volumes for UK financial services companies grew at their fastest pace since 2007 in the final quarter of last year.
More than half the 106 companies in the survey said business volumes increased, compared with 24% that reported a decline, the best split since June 2007.
More companies reported a rise in income from fees, commissions and premiums than reported a fall – the balance of +26% was the biggest margin since 2006 – and more companies saw an increase in the value of net interest, investment and trading than a decrease. These and other gains helped 36% of firms report a rise in profitability during the quarter.
But the positive survey findings were balanced by some worrying results. Despite the rise in business volumes, optimism among financial services companies was significantly lower than three months ago and employment was down.
More companies said they expect to reduce investment in physical assets such as land, buildings and vehicles than increase it in the coming year. More companies expect to cut their marketing budgets than raise them, the first fall in expected marketing spending since September 2009. The survey suggests investment in IT will see a below-average increase.
“Firms are less optimistic, employment is down and investment intentions for  are weaker, as concerns about the global recovery and ongoing troubles in the eurozone create uncertainty,” said Ian McCafferty, CBI chief economic adviser.
“Nevertheless companies are expecting business volumes and profits to continue to grow, albeit more slowly, in the next three months.”
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