Pessimism surges in the UK’s financial sector

ANDY RAIN

(FILE) A file photo dated 01 February 2013 showing Ddark clouds above London's financial district Canary Wharf, London, Britain.

Pessimism surges in the UK’s financial sector


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Two reports published by the Confederation of British Industry (CBI) and the Deloitte accountancy firm suggest the financial sector is not optimistic about the prospects of the financial sector after Brexit.

The CBI and PWC  report published on Monday suggests that the financial sector will not be ready for Brexit by March 2019.

Although recruitment in the industry is picking up and business sentiment has been stabilized, there are still concerns over the legal status of cross-border contracts post 2020, when the transition deal with the EU expires.

The CBI chief economist Rain Newton-Smith told Reuters that business sentiment in financial services remains low for nearly three years.

A periodic survey of Chief Financial Officers published by Deloitte on Monday echoes the CBI report.

Deloitte’s survey is seen as a key indicator of business confidence; it shows that 75% of Chief Financial Officers (CFOs) express pessimism over Brexit. Only 17% of CFOs expect business to improve over the next year and there is less appetite for investment.

Lenders, insurers and other key providers have opened subsidiaries in the EUto address Brexit uncertainty and retain access to the Single Market.

Last week the Bank of England deflected EU criticism that the banking sector was inadequately prepared, recalling that the UK is guaranteeing billions in cross-border euro-derivative transactions.

In an interview with the BBC, The Northern Ireland representative of the CBI, Trevor Lockhart, underscored that the British government “doesn’t fully understand business.”

“We find ourselves in a set of circumstances where the solutions that will work for Northern Ireland economically, don’t work politically, and those that work politically, don’t work economically,” Lockhart said.

Monday’s warnings from the financial sector add to broader economies woes. Last weeks, key UK manufacturers — including  Airbus, Siemens, BMW, Nissan and Jaguar — threatened with relocation. The fear is that companies in the UK will no longer be able to participate in pan-European value chains.

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