Financial Service Jobs Rise to Pre-Crisis Levels
Volumes of business across the UK financial services sector slowed in the three months to June but jobs jumped, a survey published by the Confederation of British Industry (CBI) revealed on Monday.
But recruitment in the sector rose unexpectedly in the quarter, to its highest level since before the financial crisis began in September 2007, the PriceWaterhouseCoopers(PwC)/CBI report added.
Andrew Gary, UK banking leader at PwC and one of the authors of the report said concerns about economic recovery and demand were behind a dip in the banks’ confidence.
"It’s been an unsettling quarter, given the release of the Independent Commission on Banking’s interim report and the loss of the Payment Protection Insurance case," he added.
However, he told CNBC that the overall trend was still encouraging. "I don't think there's a deceleration but one of the factors is the economy isn't growing as much as the banks through and confidence is linked to future growth," Gray said.
"They [the banks] need jobs to create the business in the first place so they can trim jobs but they are also going to have to put away capital and that will trim profitability but if they don't create jobs they can't create the profitability," he added.
A total of 44 percent of financial service firms said business volumes rose compared to 28 percent which said they saw volumes fall, leading to a balance of 17 percent of firms which said business volumes rose in the three months to the end of June well below expectations of around 30 percent and below balances recorded for the previous three quarters.
Growth in business volumes is expected to slow further in the next three months, with only eight percent of businesses expecting volumes to increase, their lowest level since December 2009, the report added.
However, despite a slowdown in business volume, the value of fee, commission or premium income rose strongly for the second quarter running, while the value of net interest, investment or trading income grew at its fastest rate since March 2007.
“The financial services sector continued to recover over the past three months, but with slower volume growth, following three stronger quarters. What is heartening is the unexpected, strong rise in numbers employed in the sector, the fastest since the financial crisis began in 2007," Ian McCafferty, chief economic adviser at the CBI, said.
McCafferty added that despite the sharper cost increases and a small rise in non-performing loans profitability continued to improve with growth in volumes and incomes and a slight widening in spreads.