Financial services firms increased hiring and investment in the second quarter in spite of continued nerves over the Brexit process, new figures show.
Employment across financial services rose at the fastest pace in a year, with a balance of 24 per cent saying they had increased hiring in the second quarter, according to the survey of major firms by the Confederation of British Industry (CBI) published Monday.
Meanwhile, booming spending on information technology continues to be a major driver of investment, with a balance of 70 per cent of the 100 firms polled saying they will increase spending compared to last year.
The CBI’s survey of Square Mile firms also reveals that 70 per cent of banks, insurers and investment managers say they are “confident” they will have plans in place by the time the UK leaves the EU at the end of March 2019, even if there is no deal.
Yet nerves remain for the City, as contingency planning for the most damaging Brexit scenarios continue, with optimism over the business environment for financial services staying flat.
Rain Newton-Smith, CBI chief economist, said: “Despite fairly subdued growth last quarter, it’s good to see financial firms stepping up hiring and investment, with digital technologies and new services seen as the best way to grow in a fiercely competitive environment.”
The figures come at the end of a quarter in which British banks reported big increases in profits amid a feeling that they are finally escaping from the legacy of the financial crisis.
Separate figures from the Banker magazine to be published today will show British lenders enjoyed the third-largest increase in profits across the world during the last year.
Pre-tax profits rose by 118 per cent to reach $37bn (£28bn), a jump of more than $20bn thanks in part to a stronger performance from HSBC, the UK’s largest bank by tier one capital.
Brian Caplen, editor of the Banker, said: “UK banking used to punch above its weight but then fell backwards after the financial crisis. It now seems to be recovering despite the headwinds of Brexit and tougher regulation.”
The stronger UK performance has boosted the share of global banking profits earned by Western European firms from 13 per cent to 20 per cent.
The research also shows the inexorable rise of the Chinese financial system, with the top four banks, all state-owned, hailing from the world’s second largest economy for the first time ever. The world’s largest bank by tier one capital is ICBC.
US giant JP Morgan Chase was the largest non-Chinese bank, while India’s banking sector suffered the worst year of any nation, the research found.
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