UK Services PMI falls to 88-month low in July following the Brexit vote, Markit says
More than 50% of the financial services firms expect the Brexit vote to have a negative impact Reuters

Optimism among financial services firms about the overall business situation in the UK has declined over the last three months to September. This is the third consecutive quarter of decline and marks the longest period of declining sentiment since early 2009, a Confederation of British Industry (CBI) and PricewaterhouseCoopers (PwC) survey has revealed.

According to the report, the quarterly survey of 115 companies is the first since the referendum vote. It said that the life and general insurance sectors showed a stable level of optimism, while sentiments among banks declined marginally.

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The highlight of the survey was that there was a sharp deterioration in sentiments across finance houses, building societies and investment managers. The report attributed this to lower interest rates and the uncertainty caused by the Brexit vote.

However, the firms saw a healthy growth in overall business volumes during the period with finance houses being the only sector to report a decline in activity.

Going forward, business volumes were expected to grow at a moderate rate, with 25% of firms surveyed expecting volumes to increase next quarter while 10% expected a decline. Another key finding was that 15% of firms said they were more optimistic about the overall business situation compared with previous quarters, while 28% said they were less optimistic.

With regards to employment, the survey revealed 24% of financial services firms had increased its headcount in the period over the previous quarter, while 24% had decreased headcount. For the next quarter, 20% of the firms said they expected employment to increase.

More than 50% of these firms had expected the Brexit vote would have a negative impact on the overall situation, while 10% said it could be positive. The top three risks according to these firms were the impact on the economy, changes in access to EU markets and the prospect of lower yields.

Commenting on the same, Andrew Kail, UK financial services leader at PwC said, "Life was busy for UK financial services firms before the Brexit vote - it just got a whole lot busier as they digest the implications for their businesses. The survey shows business performance holding up in the short term which is positive. However, the continuing fall in optimism is a cause for concern."