Financial industry on the road to recovery
FINANCIAL services in many parts of the UK, including Hertfordshire, expect business and volume to rise in the next quarter after 21 months of falls. The predictions come after a recent survey by the Confederation of British Industry (CBI) and Pricewaterh
FINANCIAL services in many parts of the UK, including Hertfordshire, expect business and volume to rise in the next quarter after 21 months of falls.
The predictions come after a recent survey by the Confederation of British Industry (CBI) and Pricewaterhouse Coopers (PwC) showing financial institutions at last see some glimmer of light at the end of the recession tunnel.
The optimism comes even though in the three months up to June, levels of business, income and profitability continue to fall they were at a much slower pace than earlier in the year.
Insurance companies are the most optimistic about growth in business over the coming quarter, while banks also expect volumes to rise. This, says the CBI, suggests industry may now be on a gradual path towards recovery.
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The CBI says building societies have experienced extremely tough business conditions since early 2008, but are now hopeful that volumes, income and profitability will stabilise in the next quarter
Ian McCafferty, the CBI's chief economic adviser, said: "Having seen business volumes tumble continuously for 21 months, some parts of the financial services sector look like they may be starting to come through the worst.
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"The pace of decline and profitability is slowing and business volumes are expected to rise in the next quarter.
"However, conditions remain challenging, particularly for the banks. Although demand looks like is it beginning to recover, it is doing so from a very low base"
Andrew Kail, UK insurance leader at PwC, said: "General insurers continue to feel positive about their outlook. Despite cost reduction measures some insurers now expect profitability to fall as the cost of claims will probably increase as the impact of the recession bites.
"The industry is hoping for a recovery in fortunes following recent rises in the equity markets and some positive news on the housing market."
The optimistic outlook for the economy in general is reflected by Philip Bailey, investment consultant at WKH Financial Services Ltd in Letchworth GC.
"Basically there is an upturn coming but there is a big question about whether we are into a false dawn," said Mr Bailey.
"Investors look at the stock markets and investment portfolios are up 35 per cent and while this is happening we are all feeling the benefit of coming out of the darkness. For investors we are moving forward from an economic point of view and professional firms are recruiting again, investing money again.
"We are through the worst of the recession but how quickly we get back to the buoyancy of 2007 remains to be seen. But if you have survived this long then the conditions ahead will not be as dark.