Financial services slowdown 'set to continue'

News Article - 02 April 2008
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The UK's financial services slowdown is continuing and looks set to do so throughout this year and the next, a new report reveals.

Figures from the Confederation of British Industry (CBI) indicate that the credit crunch worsened over the first three months of 2008 and started to affect profitability and jobs in Britain.

Employment and profitability figures fell at their fastest rate for five years during the first quarter of 2008, the latest Financial Services Survey from the CBI and PricewaterhouseCoopers states.

According to Ian McCafferty, CBI chief economic adviser, interbank markets have become "gummed up", with banks becoming more unwilling to lend and business volumes falling.

He predicted: "While liquidity injections and interest rate cuts by the Bank of England will help shore up the system, neither will solve the fundamental problem of restoring trust, so that credit markets are unlikely to return to anything like normality for some time to come."

The CBI does not expect a return to the favourable lending conditions experienced before August last year and has warned that "we can expect further tough times in the financial sector", as economic uncertainty affects the wider economy and slows UK economic growth.

Accounting software can help business to track their finances accurately, which is of particular importance during periods of economic uncertainty and slowing productivity.

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