Life insurers buoyant but financial services growth lags

Growth within the financial services sector has been slower than anticipated, although life insurance businesses are showing increasing confidence.

The CBI/PricewaterhouseCoopers financial services survey shows a balance of +28% of firms within financial services saw their business volumes rise in the three months up to June.

While this is the most positive figure since June 2007, it is well short of the +63% predicted by businesses in the previous quarter.

The survey also shows employment increases did meet expectations, with +14% boosting their workforces, although it is predicted this will swing to -20% in the next quarter.

However, there has been a significant increase in optimism within the life insurance sector, with the balance increasing from +3% in June's survey to +47% in September's.

Meanwhile, investment managers also appear to be getting more positive in their outlook, with +87% expecting an increase in their volume of business over the next three months.

Ian McCafferty, chief economic adviser at the CBI, says: "Activity picked up in the financial services sector in the last three months at a pace not seen since before the credit crunch.

"Although this growth was slower than hoped, it did help firms' profitability to rise further."

Overall, the anxiety felt by businesses over regulation and legislation appears to be easing as only 69% now feel it will limit their ability to increase their level of business over the next 12 months, down from 100% in June.