Confederation of British Industry (CBI) and PwC’s quarterly sector survey suggested firms saw strong growth in business volumes in the three months to September, with profits rebounding and hiring on the up.
It found 60% of firms said that business volumes were up, while 11% said they were down, giving a balance of +49%, the strongest reading since 2007, when it was +51%.
Rising volumes helped push up overall profitability in firms, the research found, with 60% reporting a rise, and 8% a fall, the fastest growth since March 2011. A similar rate of growth is expected in the next quarter.
Firms that didn’t do so well were general insurers and building societies.
Employment was also up in 24% of firms, while 7% said that it had decreased – an improvement on last quarter’s unexpected fall of 12%.
However, income from fees, commissions and premiums fell unexpectedly by 27% in the three months to September – the fastest rate since March 2009.
What’s more, the income class is expected to fall again in the coming quarter.
Looking ahead, firms reported statutory legislation, regulation and competition are likely to be the biggest constraints on business over the coming year, while concerns about the level of demand dropped off sharply.
CBI director for economics Rain Newton-Smith said: “The UK’s financial services sector is enjoying its strongest run of growth since 2007, with activity rising across all customer categories and profitability bouncing back.
“With competition one of the top concerns for the coming year, the sector could be moving to a new phase in the recovery where firms are feeling more assured about the level of demand, and are now shifting their gaze to competing for new customers and business. This is reflected in their expectation that sales to new customers will be the main driver of growth in the coming quarter.”
