Optimism in Financial Sector Drops

29th January 2018.

Optimism among financial companies have deteriorated for the third quarter in a row in the final three months of last year, according to a  new survey. This highlights how issues such as Brexit, excessive bureaucracy and money pressures, continue to plague business owners’ minds. The financial sector of the UK is a powerful part of the economy, where small businesses’ relationships with lenders and big banks dictate how their business will survive. Here at the Credit Protection Association we have numbers of members from within the financial sector, as well as our company itself. No-one is invincible from Brexit concerns and no-one is free from moments of doubt and pessimism. They can however be overcome, and CPA has staunch preparations in place to combat Brexit and further red tape. We strongly recommend fellow business owners do the same.

The survey is the latest quarterly survey of the financial sector by the Confederation of British Industry (CBI) and PWC, which found that business sentiment is suffering at the hands of the fraught economic climate.

In a small chink of hope, however, the poll found that  a majority of financial companies believe the business conditions they are working in improved over the three months to the end of the year.

The CBI, and the accountancy firm, PWC, polled 92 businesses between November 14 and December 11 for the survey.

Rain Newton-Smith, chief economist at the CBI expressed concern for the “damaging impact” of Brexit uncertainty and sees its connection to business confidence as it impacts Britain’s role as a vibrant centre of financial technology and innovation.

Financial services companies that operate internationally are particularly worried about the trading landscape that is agreed as part of the Brexit negotiations.

Banks in particular have threatened to move thousands of staff out of Britain and put them in an EU centre such as Paris or Frankfurt after Britain’s exit.

The upcoming General Data Protection Regulation (GDPR) will soon be enforced within businesses, and will affect financial services most. The new legislation will input restrictions on how financial services use customer information- even if it’s to help a consumer out of insolvency- and will heavily impact the landscape of the sector.

Overall the survey found that a balance of -22 per cent of firms were optimistic about the future, compared with -6 per cent over the previous three-month period. It found a balance of 14 per cent for firms expecting business to pick up, and a balance of 15 per cent for those reporting that their profitability rose during the final three months of the year.

Brexit concerns are in the minds of many, if not all, business owners. Potential changes to trading conditions are putting pressure on firms, and many banks are threatening to jump ship altogether. Ultimately, the issue is uncertainty. Uncertainty in Brexit of course, but also uncertainty in red tape. The Government’s consistent bureaucracy excesses, from the incoming GDPR to increased business and interest rates, it all makes it that bit harder for small firms.

At the Credit Protection Association we have shared the fears that many of our members hold. The professional landscape of 2018 is murky at best and it is not surprising that many owners are struggling to find their way out. However, there is a small step that business owners can take; start to prepare. Prepare for Brexit by coming to CPA to free up cash flow, prepare your British and EU workers for how it will impact your business, and also Prepare for GDPR. Here at CPA we have recently hired a new GDPR adviser to ensure all staff are working in sync with GDPR rules and regulations. It is not easy to work in the dark, so don’t do it. Contact CPA for any help and advice and ensure your optimism skyrockets.

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

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