World Economy

Brexit, Global Slowdown Dent UK Financial Firms’ Confidence

Brexit, Global Slowdown Dent UK Financial Firms’ ConfidenceBrexit, Global Slowdown Dent UK Financial Firms’ Confidence

More than four in ten financial services firms in Britain say their confidence has been knocked in the face of the cooling global economy, Brexit concerns and the slump in oil prices.

Just 3% of the more than 100 major financial institutions surveyed in a new report out Monday said they were “more hopeful” about prospects than they were a year ago, Yahoo reported.

The Financial Institutions Sentiment Survey, by Lloyds Bank, also questioned asset managers and private equity funds, and noted that the two major threats facing the UK’s economy were volatile financial markets and new regulation.

Some 70% of firms said financial market volatility, sparked by a slowdown in economic expansion in China, was a key obstacle to UK growth.

As China’s industrial growth has eased, global oil prices have fallen by almost three-quarters since the summer of 2014.

The upcoming EU referendum vote and warnings by Chancellor George Osborne and Bank of England Governor Mark Carney that a vote to leave the 28-nation bloc will damage growth, have also clouded the economic environment.

The survey found that 70% of companies said new regulation could also hinder expansion in Britain.

However, 52% of those polled still forecast that the UK is set to grow faster than its G7 peers–the US, Canada, France, Germany, Italy and Japan–over the coming year.

Firms cited Britain’s skilled workforce, financial reputation and relative economic stability as being among its chief attractions.

  Guarded Optimism

Lloyds Commercial Bank managing director of financial institutions Ed Thurman said: “2016 has already proved to be a very challenging year for the UK financial services sector and this has dented confidence across the sector.

“The headwinds of economic volatility and new regulation, do not show signs of abating, but the overwhelming view is that the UK will ultimately fare as well as, or better, than our G7 peers.”

He added: “The future of the UK’s status as a financial services center is bright, but it is no longer a story about London.

“We are witnessing a resurgence of the regions, as vital hubs for the sector, and we can expect to see firms ramp up investment in towns and cities across the UK over the coming year.”

Meanwhile, a separate survey of FTSE 350 companies published Monday finds boards in pessimistic mood about the economy, broadly indifferent to Brexit and frustrated about the tide of new regulation and legislation.

The biannual FT-ICSA Boardroom Bellwether report, which canvasses views on the external environment as well as key governance issues such as board diversity, regulation, corporate culture and risk, found that confidence in the economy is at its lowest since the surveys began in 2012.

The International Monetary Fund recently highlighted risks of a new financial crisis, warning that global output could be cut by 4% over the next five years by a repeat of the market mayhem witnessed during the 2008-09 recession.