Financial services to cull 8,000 jobs in three months

Financial services will cut a further 8,000 jobs over the next three months, as the sector struggles under increasingly negative future prospects, according to a survey out today.

The pace of growth in the UK financial services sector continued to slow in the three months to September, according to the latest CBI/PwC Financial Services Survey.

In the next three months firms expect growth will slow further, and for the first time in two years there will be no improvement in profitability.

Meanwhile, sentiment has fallen for the first time since March 2009, as firms anticipate more challenging conditions.

Ian McCafferty, chief economic adviser at PwC, said: "After a torrid couple of months on global financial markets, the mood has clearly darkened.

"With business volumes predicted to slow further and little growth in income expected, firms are planning to reduce their headcount in the next quarter."

Uncertainty about future demand, worries about the global recovery and shifting regulatory sands are weighing on sentiment, he said.

Of the 84 financial services firms surveyed, 33% saw business volumes rise in the quarter to September, and 24% reported a fall.

The resulting rounded balance of +10% is the lowest since June 2010, which showed a balance of +9%, and represents a slower rate of growth than the June quarter of +17%.

A rise in business volumes and income helped push up profitability, with 34% of firms reporting a rise and 18% a fall, giving a balance of +16%. The figure compares with +13% in June.

However, firms expect the pace of growth to slacken in the coming quarter, with business volumes expected to ease (+5%) and profitability to flatten out (-4%).

"The recovery in the financial services sector is continuing but the pace of growth has slowed compared with earlier in the year," said McCafferty.

The slow pace of growth has weighed heavily on sentiment about the general business situation, with a net 20% of firms less optimistic than three months ago, the first time that confidence has fallen back since March 2009 (-34%).