Worst streak of British bank pessimism continues

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Europe

According to a survey published on Monday, Britain's financial service firms report another decline in optimism about the business environment, making this the longest streak in falling sentiment since the global financial crisis in 2008.

The latest quarterly survey of 94 financial services firms, business lobby CBI and consultancy firm PwC found sentiment about Britain’s overall business climate deteriorating, with banks and building societies especially pessimistic.

Confidence in the financial services sector – Britain’s biggest source of corporate tax revenue and largest export sector – has now declined in six of the last seven quarters.

“While demand in the sector is expected to hold up in the near term, we can’t ignore the fact that optimism has dropped in almost every quarter for the past two years,” said Rain Newton-Smith, CBI chief economist.

The uncertainty about Britain’s future trading relationship with the European Union continued to weigh on the industry.

Britain will have to negotiate new trading terms with the EU and it is unlikely banks will retain access to sell their services and serve clients across the economic bloc.

Prime Minister Theresa May called on Friday for Britain to stay in the European Union’s single market during a roughly two-year transition out of the EU while offering concessions on a divorce deal as she appealed for a revival of Brexit negotiations.

But the job market was broadly stable in the last quarter and firms are expected to step up the pace of hiring over the coming quarter, the survey showed.

Source(s): Reuters