Sharp drops in revenues and profitability are causing continued suffering, while business volumes remain very weak, Ian McCafferty , CBI chief economic adviser, said in a report based on a quarterly survey of financial companies. Firms are making heavy cuts to staff numbers and investment plans to make savings and reflect weak demand.
Revenue continued to fall sharply in the first three months of the year as companies cut costs. HSBC Holdings Plc , the UKs biggest bank, last week said it will fire about 1,200 workers in the UK after the economy contracted more than initially estimated in the fourth quarter. About 1.05 million people work in the UK financial services industry, according to the confederation.
About 34% of companies surveyed said they were less optimistic about the financial services industry than they were in December, the CBI said.
Banks cut jobs at a record rate in the three months through early March, helping to reduce costs at the fastest rate since 1993, the CBI said. Banks expect revenues to halt their decline in the next three months, the survey showed.