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UK financial services most upbeat in 17 years

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Financial services firms in the U.K. are at their most upbeat for nearly 17 years, according to a new CBI/PwC survey.

With 59 percent of firms saying they felt more optimistic about the overall business situation in the sector, compared to six percent feeling the less optimistic, the balance of 53 percent is the highest since December 1996.

(Read more: What do millionaires know that we don't? Optimism hits high)

The survey revealed that financial services firms expect to add more jobs in the next three months,albeit at a slower rate than the previous quarter, when employment in the sector increased by 24 percent, its fastest rise since September 2007.

"With optimism rising and jobs profitability growing, this is an encouraging quarter for the financial services sector," said Stephen Gifford, the CBI's director of economics,adding, "Firms are expecting positive momentum to carry into the next three months, alongside a strong recovery in business volumes, which will boost profits further."

(Read more: As bears growl, fund managers' optimism shoots up)

As noted by Gifford, business volumes were lower, with 32 percent of firms saying they had experienced a downturn. This was driven by falls in business with industrial and commercial companies and overseas customers, both down 18 percent.

Still, 51 percent expect business volumes to increase by the end of the year.

Kevin Burrowes, PwC's services leader, said, "Activity and profitability are expected to grow as the economy recovers, and investment in new products and infrastructure is increasing. A reduction in industrial and commercial business down to the quiet summer was expected and is not an indication of a long-term trend."

(Read more: Small business less optimistic; sales, hiring hopes grow)

However, Burrowes was keen to note that statutory legislation and regulation continue to be a burden on the ever-increasing optimism of the financial services sector, with 71 percent of those surveyed stating that it would be a likely brake on their business. That is the largest number since March 2011.

Over half of firms said that costs had already gone up since they have had to deal with the new regulators of the Prudential Regulatory Authority and the Financial Conduct Authority.