Business

Monday October 5, 2009

UK finance sector shows first signs of recovery


LONDON: The U.K. financial sector reported higher business volumes last month for the first time in two years though levels remain well below normal, according to a survey released Monday.

The report by the Confederation of British Industry and PricewaterhouseCoopers found that 32 percent of respondents said business improved in the three months to early September, while 24 percent said it was worse.

The positive balance was the best in two years, before the credit crunch hit.

Securities traders and investment managers reported strong growth in the quarter, while banks and building societies - banks owned by depositors and borrowers - expect to see improvement in the next three months, the survey said.

Life insurers and insurance brokers anticipate further declines but at a slower rate.

"Future demand is still a major concern for financial services firms, however, and further pain will continue to be felt in job losses and lower investment," said Ian McCafferty, the CBI's chief economic adviser.

A net 30 percent of respondents said headcounts had been cut during the period. In a dismal job market, staff turnover also fell for the sixth consecutive quarter, the survey said.

Banks reported that business stabilized during the period, disappointing hopes for a rebound.

"Confidence is, in part, offset by concerns of further impairments and the impact of tougher regulation," said Andrew Gray of PricewaterhouseCoopers.

"All signs indicate that the initial stages of recovery are likely to be tentative and, in order to protect profitability, cost reduction remains an ongoing theme," Gray said.

The survey was conducted between Aug. 19 and Sept. 2; there were 89 respondents. - AP

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