Job cuts forecast as volume growth slows

News Article - 04 October 2006
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Financial services companies' business volume growth has slowed over the past quarter but firms believe the situation will improve, a CBI survey shows.

The study, carried out jointly by CBI and PricewaterhouseCoopers LLP, states that in the past quarter, income fell for the first time in two years, profitability growth decreased and recruitment was reduced.

According to the results however, firms are more optimistic about the coming months, in which income and business volumes are expected to get back on track and profitability is predicted to strengthen.

Richard Lambert, CBI director-general, said: "After a year of solid growth, the slower growth in business volumes in this sector is disappointing, even if expected.

"Thankfully it seems to be a temporary lull, and next quarter's forecast recovery is heartening, with volumes and profits returning to the rates of growth enjoyed for much of the past year. But modest job cuts are expected and spending plans for the year ahead have been scaled back."

Around 26 per cent of those surveyed said volumes had decreased. The balance of minus four per cent represented the first decline in business for private individuals since 2004.

Mr Lambert added that the UK industry is a "powerhouse" of the economy and a world-leading sector, and policymakers ought not to take it for granted.

The news follows earlier research by CBI which found that two-fifths of employers think regulations in the workplace have harmed the UK's reputation as a place to do business.

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