Jobs: Employment falling in financial services despite growth in business

Although the latest CBI/PwC Financial Services Survey for the three months to December showed the amount of business in financial services growing for the seventh quarter running, jobs were still being shed.

And the survey of 106 financial companies indicated that looking to the future there are concerns about the global recovery and ongoing troubles in the Eurozone.

In the next three months firms expect business to continue growing, albeit at a slightly slower pace. Firms also say they plan to invest less over the coming year on land and buildings, vehicles, plant and machinery.

Unusually, firms also say they plan to invest less on marketing over the same period, representing the first fall since September 2009. Investment in information technology is expected to see a minimal increase.

Shortage of finance, uncertainty about demand and business prospects, and inadequate return on investment were seen as the factors most likely to limit investment.

Ian McCafferty, chief economic adviser at the bosses’ organisation the CBI, said: “This has been a strong quarter for the financial services sector, with increases in sales volumes and profits showing that the sector’s recovery is on track.

“But firms are less optimistic, employment is down and investment intentions for next year are weaker, as concerns about the global recovery and ongoing troubles in the Eurozone create uncertainty.

“Nevertheless companies are expecting business volumes and profits to continue to grow, albeit more slowly, in the next three months.”

Kevin Burrowes, the UK financial services leader at PwC said he believed job losses in the banks seemed “inevitable” as they seek to manage their cost bases. He added: “So eurozone turmoil, uncertainty in the global economy, UK austerity, weak household incomes, increased competition, significant regulatory changes, and reducing headcount, not to mention the fight for funding, all point to a challenging year for bank management. Careful management of business performance and reform versus all aspects of risk management will be critical.”

Howard Scott, insurance partner at PwC, said he expected general insurers to continue to plan further headcount reductions in response to the tough market conditions.