Tweet
The financial services sector is suffering record falls in income and profitability as the recession deepens and the fallout from the credit crunch spreads further, according to a survey published today.
Thousands of jobs are being lost every month and investment plans have been slashed, the latest CBI/PWC financial services survey found.
The sector, which spans banks, building societies, insurance companies, fund managers and securities trading firms, employs about one million people, with job losses now running at between 8,000 and 10,000 a quarter. Ian McCafferty, the CBI's chief economic adviser, said: "We expect that to accelerate as we move towards the middle of the year."
John Cridland, CBI's deputy director general, said: "With the economy starved of credit, the government needs to provide further assistance."
John Hitchins, of PricewaterhouseCoopers, said: "Sentiment in the banking sector has seen its greatest fall since the emerging market crisis of 1998."
In the insurance industry, the picture is mixed, with the life assurers facing business levels running well below normal but general insurers expecting profits to rise on higher volumes, higher premiums and falling costs. Sentiment in the fund management sector is described as "at rock bottom", while securities traders are having to cope with steep falls in business.
Cridland described credit as the "number-one issue". He urged a "twin-track strategy". He said the government and the Bank needed to use the national balance sheet to underpin the banks and allow them to re-enter the lending market on a bigger scale. The authorities could also help in other ways, for example, in taking corporate paper. But he acknowledged: "There is no silver bullet, no easy option."
McCafferty said the government and the Bank of England did not need to wait until interest rates had fallen to zero before adopting a more innovative approach to monetary policy.
guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
More...
