Financial services business volume grew in Britain for the seventh consecutive quarter in the final three months of 2011, a survey has revealed.
The CBI/PwC Financial Services Survey indicated that the level of business grew at its fastest pace since June 2007 between October and December and although the rate of growth is expected to tail off, firms anticipate that volumes will continue to increase in the first quarter of this year.
More than half (53 per cent) of the 106 financial companies polled enjoyed volume growth in the fourth quarter, while 24 per cent saw volumes fall. The 29 per cent difference between firms which registered growth as opposed to decline was the highest since June 2007 and five per cent greater than had been expected.
This helped firms increase profitability for the tenth survey in a row, with more than a third (36 per cent) enjoying higher profits, whereas 22 per cent saw their profit levels decline. The 14 per cent balance was lower than the 16 per cent balance recorded in the third quarter of last year.
But despite these impressive figures, firms are adopting a cautious approach towards investment and employment in the year ahead. Optimism in the financial services sector is lower than it was during the previous quarter, at minus 24 per cent. Employment has fallen from three months ago, at minus 13 per cent.
Meanwhile, investment in land and buildings is expected to be down by 29 per cent in the coming year, while money spent on vehicles, plant and machinery is expected to fall by 21 per cent during 2012.
The amount of money spent on marketing is also expected to decrease (by 10 per cent) for the first time since September 2009. Although firms expect investment in IT to rise, the four per cent boost is seven times lower than the usual 28 per cent increase normally seen.
The companies polled for the survey indicated that finance shortage, uncertainty about demand and business prospects, and inadequate return on investment were the factors most likely to limit investment.
Ian McCafferty, CBI chief economic adviser, said: “This has been a strong quarter for the financial services sector, with increases in sales volumes and profits showing that the sector’s recovery is on track.
“But firms are less optimistic, employment is down and investment intentions for next year are weaker, as concerns about the global recovery and ongoing troubles in the Eurozone create uncertainty. “Nevertheless companies are expecting business volumes and profits to continue to grow, albeit more slowly, in the next three months.”