OPTIMISM within the financial services sector has hit its highest level since at least 1989 – but experts are demanding answers on currency, governance and regulation ahead of September’s Scottish independence referendum.
More than two-thirds of financial services firms feel confident in the outlook for their sector, according to a quarterly survey published today by the CBI and accountancy firm PWC.
The reading is the highest since the survey began in 1989, with respondents also reporting that profits rose in the three months to 31 December for the fifth consecutive quarter.
But Lindsay Gardiner, a financial services partner at PWC in Scotland, warned: “As we begin the countdown to the referendum in September, clarity around currency, governance and regulation will be important in ensuring the financial service industry retains the confidence to invest and grow its presence in Scotland, the biggest market outside London.”
The data from the sector, which accounts for 10 per cent of the UK’s gross domestic product (GDP), will be seen as further evidence that the recovery is broadening and deepening.
Matthew Fell, the CBI’s competitive markets director, said: “As the recovery takes root in the wider economy, it is beginning to feed through to financial services firms.
“Things are starting to look more ‘normal’ after five years of volatility. All the key indicators – optimism, business volumes and profitability – are up.”
On the employment front, 10,000 jobs were created in the final quarter of 2013 and a further 15,000 posts are expected to be added in the first quarter of 2014.
This would take employment in the sector – which includes banks, insurers, investment managers, securities traders and building societies – to 1.16 million during the current quarter.
Fell said that, in employment terms, it meant “we are half-way to recovering where we were just before the financial crisis peak in the fourth quarter of 2008”.
Philippe Guijarro, the Edinburgh-based head of UK life assurance at PWC, said: “The war for talent will undoubtedly heat up in 2014 with many firms planning to further strengthen their teams as we’ve recently seen among Scottish asset management firms.”
But Fell warned that Labour leader Ed Miliband’s pledge to refer the banking industry to the Competition & Markets Authority would create “a long period of uncertainty” hanging over the banking sector, “which is not good for sentiment”.
Last week Miliband said he would force Britain’s five biggest banks to sell off branches in order to stimulate greater competition in the sector.
Metro Bank, the lender launched in 2010 by American tycoon Vernon Hill, yesterday said it had raised a further £387.4 million from private investors and institutions to fund its growth in the UK.
The bank – which has raised £641m in total to fund its British operations – currently has 25 branches in London and south-east England.
A broader survey also published today shows that 48 per cent of small businesses plan to take on staff this year, compared with 37 per cent of larger firms.
Demand for staff in the “booming oil and gas sector” meant that the figure rose to 58 per cent for businesses in Aberdeen and the North-East, according to the poll by recruitment firm Michael Page.