More than four in ten major financial service firms said their confidence has been knocked in the face of the slowing global economy, Brexit fears and a slump in oil prices – according to a report.
In recent months 42% of major banks and insurers said their “confidence had diminished” because of this cocktail of ongoing uncertainties, said the Financial Institutions Sentiment Survey 2016 by Lloyds Bank.
Only 3% of the more than 100 major institutions surveyed said they were more “hopeful” about prospects than they were a year ago.
The firms, which also included asset managers and private equity funds, added that the two major threats facing the UK’s economy were volatile financial markets and new regulation.
The report said 70% of firms said jumpy financial markets, sparked by a slowing economy in China, was a key obstacle to UK growth.
As China’s industrial growth has slowed, global oil prices have fallen by some 70% since the summer of 2014.
The UK’s June 23 EU referendum vote and warnings by Chancellor George Osborne and Bank of England governor Mark Carney that a vote to leave the 28-nation bloc will damage growth, have also clouded the economic environment.
The survey found that 70% of companies also said new regulation, as watchdogs keep a tighter focus on financial firms, could also hinder expansion in Britain.
However, 52% of firms surveyed still forecast that the UK is set to grow faster than its G7 peers – the US, Canada, France, Germany, Italy and Japan – over the coming year.
Firms cited Britain’s skilled workforce, financial reputation and relative economic stability as being among its chief attractions.
Lloyds Commercial Bank managing director of financial institutions Ed Thurman said: “2016 has already proved to be a very challenging year for the UK financial services sector and this has dented confidence across the sector.
“The headwinds of economic volatility and new regulation, do not show signs of abating, but the overwhelming view is that the UK will ultimately fare as well as, or better, than our G7 peers.”
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