U.K. Finance Firms' Optimism Wanes Amid Brexit Plan Uncertainty
U.K. Finance Firms' Optimism Wanes Amid Brexit Plan Uncertainty
(Bloomberg) -- U.K. banks and life insurers are less optimistic in their outlook because of uncertainty over Brexit, the Confederation of British Industry said.
Sentiment about the overall business situation fell in the three months to June, for the fifth time in the last six quarters, according to the study of 94 firms by the industry lobby group and auditor PricewaterhouseCoopers published on Tuesday. However, the companies also reported rising profitability and employment numbers.
Prime Minister Theresa May, whose position weakened after losing her majority a month ago, is coming under pressure over how Brexit should unfold as U.K. lenders prepare to deliver their contingency plans to the Bank of England this week. Amid the uncertainty over the terms of the deal with the European Union, companies are concerned about a potential deterioration in the economy, according to the CBI.
“Whilst business activity is holding up strongly, optimism took another dive, which likely reflected a mix of Brexit uncertainty and concerns that financial market conditions could tighten,” Rain Newton-Smith, CBI director of economics, said in a statement.
Financial services firms reported “robust expansion” in the three months to June, driven largely by demand from private and corporate clients, according to the survey carried out before the U.K.’s general election on June 8. Business volumes are also expected to rise further over the next quarter, though at a slower pace.
“Political uncertainty and the ongoing wait for an agreed Brexit blueprint are fueling more questions about companies’ futures,” Andrew Kail, head of financial services at PwC, said in the statement. In response, “firms continue to fine-tune their contingency plans.”
To contact the reporter on this story: Richard Partington in London at rpartington@bloomberg.net.
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Jon Menon, Keith Campbell