2011-03-24
By Editor
Confidence among banking, finance and insurance professionals looks to be on a downward trend according to the latest ICAEW / Grant Thornton UK Business Confidence Monitor.
"Confidence in the banking, finance and insurance sector has certainly weakened in the last 15 months.In Q1 2010 the sector’s Confidence Index stood at + 32.4 points. Since then there has been a general downward trend. This can in large part be explained by the general uncertainty on how well the UK would exit the recession," said Peter Allen, head of financial services at Grant Thornton.
However confidence among banking, finance and insurance firms remains above the UK average which for Q1 2011 is at +9.6 points.
Professionals in the financial services industry expect the rate of growth for both turnover and gross profits to improve over the year ahead. They report expansion of 2.0% for turnover and 2.9% for profits over the last 12 months and expect expansion of 5.4% and 5.2% respectively over the coming 12 months.
While encouraging, the forecast growth rates remain well down on pre- recession levels when annual growth between 8% – 10% was typically reported.
"The growth predictions for the forthcoming year within the sector will play a large part in the overall recovery of the UK economy. Therefore it is reassuring to see that in terms of profits and turnover professionals within these sectors are expected to pretty much double their rate of expansion,” continues Allen.
"Uncertainties around public and private debt in Europe and the US will continue to suppress activity in the sector, and global re-regulation will continue to impose costs and political uncertainty. However, there has been a noticeable increase in M&A activity in the last quarter which should be an indicator of an underlying improvement in sentiment."
Professionals in the banking, finance and insurance industry report that they have seen only a 0.5% lift to total salaries over the last 12 months, while basic salaries increased by 1.4%. The monitor typically recorded annual expansion of about 4% for total salaries before the recession.
"It will be worth watching to see if confidence in remuneration will increase in the next quarter given the new restraints imposed on the banking industry by Project Merlin," Allen concluded.
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