Business optimism falls post-Brexit despite solid growth

Sentiment in the financial services sector has fallen for the third quarter in a row as firms digest the impact of Brexit, according to the Confederation of British Industry (CBI).

The survey, by the CBI and PricewaterhouseCoopers, found optimism surrounding the UK's overall business situation since the EU referendum showed the longest period of decline since the 2009 financial crisis.

This deteriorated sharply within financial companies, building societies and investment managers, but was broadly stable in the life and general insurance sectors.

The banking industry fell only slightly.

Overall business volumes saw a healthy growth in the three months to September, however this is expected to slow in the final quarter, but remain steady in the long run.

Only financial companies reported a drop in activity.

Just over half of all financial services firms surveyed said the impact of Britain's decision to leave the EU was negative, citing market volatility as the main concern.

"The challenges facing the sector have not gone away, they've actually grown," said CBI chief economist Rain Newton-Smith.

She (Munich: SOQ.MU - news) added that with firms voicing strong concerns about Brexit, and the risks to the wider economy in the years ahead, "the Government must allay their unease with clear plans for negotiations to leave the EU".

"An ambitious Autumn Statement would also set a clear direction for growth and prosperity," he added.

Investment intentions improved marginally over the last quarter, according to the report, and growth in spending on IT is expected to remain robust over the year ahead.