Wednesday, November 29

Brexit despite business growth: Banks worried by low rates



The Telegraph Britain’s finance firms did increasing amounts of business over the summer but remain worried by ultra-low interest rates and the Brexit vote, according to a study by the Confederation of British Industry and PwC.

By contrast manufacturing businesses are undergoing “an industrial renaissance” according to industry group the EEF.

Profits grew at 37pc of finance firms and fell at only 13pc over the three months to September, the CBI’s study found, indicating growing prosperity in the financial services industry .

Similarly 48pc said business volumes increased over the past three months, outnumbering the 13pc which suffered a fall in work levels.

Despite that apparent growth, financiers remain downbeat and expect the improvements to slow down in the coming quarter.

The sector was one of the strongest supporters of a remain vote in the run up to the referendum, and is still worried despite the economy holding up better than expected in the three months since the decision to leave.

The study found 50pc of finance firms believe Brexit is negative for their business, while just 10pc see it as a positive.

“As firms get back into the swing of things after the summer, and continue to digest the implications of the EU Referendum, it’s good to see that demand in the financial services sector has held up,” said the CBI’s chief economist Rain Newton-Smith.

“But the challenges facing the sector have not gone away – they’ve actually grown. Add the uncertainty caused by Brexit to low interest rates, technological change and strong competition, and it’s plain to see why optimism is falling and pressure on margins remains intense.

She said the City of London would be comforted by a clear plan explaining how Brexit will take place, as well as extra investment spending in November’s Autumn Statement.

Meanwhile the EEF and Santander’s annual study of the manufacturing industry said the sector has climbed up the international rankings to become the ninth largest in the world.

Following the Brexit vote the sector needs to look for more global markets to grow further, the report said.

“It is great news that the UK has re-entered the top ten manufacturing nations. It is interesting to see that there has been growth in the non-traditional sectors and regions showing the increasing importance that manufacturing has across the country,” said Santander’s Charles Garfit.

“However, to build momentum on this renewed optimism manufacturing businesses in the UK must look at the opportunities beyond our own borders to extend their growth potential.”