The third quarter of 2018 marks the 10th consecutive quarter of declining business confidence, the most prolonged period of pessimism since the 2008 global financial crisis, according to a recent CBI/PwC Financial Services Survey of 100 firms.

The deterioration of mood in banking and investment management was particularly widespread. Only finance houses reported an improvement in optimism.


Overall business volumes increased slightly in the three months to September, although the level of business dipped slightly below normal. Evaluating 2018’s final quarter, business volumes are expected to remain stagnant and unchanged, giving way to the weakest growth expectations since 2009, the survey said.

Over the past year, 42% of firms claimed they had a harder time hiring new employees when asked about recruitment. Almost half of firms said skills shortages could constrain business expansion in the year ahead – the highest share since the start of the survey in 1989 – particularly when looking to recruit IT workers for the coming year.

“While it’s good to see that demand for financial services is holding up, with business volumes edging higher last quarter, it’s simply impossible to ignore the dangerous signs of strain on the sector arising from the combined challenges of a subdued economy, Brexit, regulation and rapid advances in technology,” said Rain Newton Smith, CBI chief economist.

“For the sector to continue to be one of the UK’s most attractive economic assets, it is fundamental that a Withdrawal Agreement with the EU is agreed. This will provide temporary but essential relief for financial services firms of all sizes. Then attention can turn to the vital task of finalising our future economic relationship with the EU, in which services need to play a pivotal part.”

In 2017, greenfield FDI into the UK declined across project numbers (-10%), capital investment (-5%) and jobs created (-11%) - according to fDi Markets. For 2018, the number of FDI projects into the UK is on track for a record low since 2009.