The Financial Services sector is concerned about UK economic growth being weaker than the rest of the G7 this year, as Brexit takes hold
70 per cent of firms in the financial services sector are concerned that UK economic growth will be significantly weaker than the rest of the G7 this year. That’s compared to only 23 per cent last year. However, most firms in the sector expect the economy to remain resilient in 2018.
The Financial Institutions Sentiment Survey*, published by Lloyds Bank Commercial Banking, shows that Brexit is seen as by far the greatest risk for the year ahead, with 55 per cent of the 107 executives surveyed saying they are worried about the effects of leaving the EU. With one year to go until the UK leaves the EU, cross border access tops the list of specific worries.
Robina Barker Bennett, Head of Financial Institutions at Lloyds Bank, says: “As the biggest industry in the UK, the financial services sector is a crucial bellwether for the nation’s economic prospects.
“Fears about Brexit are looming large as the final countdown begins to March 2019, but our survey suggests that the UK economy will prove to be resilient and that it will come through the challenges of the next few months relatively unscathed,” she adds.
“There is, however, a real risk that our growth will be slower this year than in all other advanced nations; and that we will fall to the back of the G7 pack.”
Aside from Brexit, other risks that respondents are concerned about for the coming 12 months include economic uncertainty (35 per cent), regulatory implementation (31 per cent), market volatility (24 per cent) and geopolitical uncertainty (18 per cent). Cyber threats (17 per cent) is also cited as a key cause for consider amongst business leaders.
Robina Barker Bennet adds: “The headwinds of economic and geopolitical uncertainty, regulatory pressures, and cyber threats mean choppier waters for the sector in the months ahead.
“With one year to go until the UK leaves the EU, it is no surprise that Brexit is seen as the biggest risk on the horizon. But despite the worries about growth prospects; the lack of clarity about the final deal; and the speculation about the future of the financial services industry, the sector is upbeat about its growth prospects and long term future. There is an unmistakable confidence that the UK will hold on to its position as the single most important hub for financial services in Europe.”