LONDON (MNI) – The UK financial services sector grew in the three
months to June, but the pick-up was modest due to concerns about future
regulation and legislation, the latest quarterly survey by accountancy
firm PricewaterhouseCoopers and CBI showed.

Business volumes rose at their fastest rate since September 2007,
with the Q2 survey showing a net balance of 9% of respondents reporting
an increase in business volumes versus 1% reporting that in the first
quarter. The 9% net balance is the highest since September 2007.

Business volumes are expected to rise even further in the third
quarter, with those expecting growth in the next three months rising to
a net balance of 63% from 48% in Q1, the strongest balance since
December 1993 when the net expectations balance hit 65%.

The confidence reading fall to a net balance of 3% from 6% in Q1.

The CBI said life insurance companies, financial firms and
securities traders had reported healthy increases in volumes, with
insurance brokers seeing volume grow for the first time since March
2009.

Banks were the only sector to see business volumes fall in the last
three months, with volumes at building societies and insurers flat. The
survey was conducted between May 19 and June 2, and covered 73
respondents.

“This survey was conducted when financial markets were feeling the
intense strain from fears over euro area sovereign debt and, for the
first time in over a year, a notable minority of firms were worried that
the risk of further market deterioration is high,” said John Cridland,
CBI deputy director-general.

“A high proportion of firms is worried about the impact of
prospective regulation on their business, and many remain concerned that
red tape will hamper growth prospects in the year ahead,” Cridland said.
“Firms have also become more worried about increased competition within
the sector, particularly from new entrants and from overseas.”

–By Stephanie Sprague, Need To Know News

–London Bureau; Tel: +442078627481; email: stephanie.sprague@ntkn.com

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