Companies across the finance industry are expected to increase their workforce in the second quarter of 2017, but insurance brokerages are expected to cut jobs, according to the latest CBI/PwC Financial Services Survey.
The new study polled 98 financial services companies from January to March, a period when 30% of firms increased employment while 19% downsized their staff.
In the next quarter, numbers employed are expected to see a “more solid increase” (+25%), the survey says, with headcount expected to rise in all sectors except that of insurance brokers (-31%).
In terms of business expansion in the next 12 months, companies view statutory legislation and regulation (68%), level of demand (67%) and competition (56%) as the most significant potential constraints on growth.
Financial firms are expected to increase IT (+46%) and marketing (+11%) spending in the same period, but they will cut back slightly on other forms of capital expenditure such as land and buildings (-4%) and vehicles, plant and machinery (-11%).
Overall profitability rose significantly in the first quarter, with income from fees, commissions and premiums rising by 17%. From April to June, however, growth is expected to slow at 6%.
Total operating costs are expected to rise next quarter (+8%) while average costs are predicted to decline (-10%).
“It’s great that financial services firms have begun the year with a spring in their step – notwithstanding Brexit uncertainty – with volumes expanding at a robust pace, profitability improving and hiring on the up,” said CBI chief economist Rain Newton-Smith.
Newton-Smith said growth is “likely” to slow as the year goes on, amid “broader uncertainty” and higher inflation.
“Firms continue to keep a close eye on the challenges ahead, from concerns over labour shortages and the impact of regulation costs on business expansion,” he added.
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