Societies fail to share finance sector optimism
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Your support makes all the difference.Business confidence is booming in the financial services sector apart from building societies, which are suffering from the effects of long-term stagnation in the housing market, according to the Confederation of British Industry.
Finance houses reported the strongest increase in optimism, followed by banks and venture capitalists. Overall, the financial services sector enjoyed its ninth consecutive quarter of rising business confidence, the latest CBI survey of the sector shows.
By contrast, life insurers, building societies and insurance brokers experienced the sharpest falls in confidence.
Volumes increased most for finance houses, as in the previous survey in September, followed by banks and, to a lesser extent, general insurers.
High street banks in particular have benefited from the economic recovery, which has seen bad debts halve at TSB, whose results were reported on Thursday.
Contrary to most perceptions, banks have overall been increasing job numbers rather than cutting them, according to the survey. Employment in the whole of the financial sector rose over the last three months for the third consecutive period and at the fastest rate since September 1990. But financial services firms expect a downturn over the next three months.
Life insurers, general insurers and insurance brokers expect to cut jobs markedly, while finance houses, fund managers and securities traders expect employment to continue rising in the first quarter.
Lack of optimism among building societies stems partly from the growing realisation that the Government is no longer committed to home ownership in the way it was in the 1980s. The decline in confidence is the largest since September 1992.
Building society sources said this would reinforce the impetus towards further mergers and link-ups such as the Leeds/Halifax proposed merger and the Lloyds Bank/Cheltenham & Gloucester deal.
Building society business volumes dropped by 14 per cent in the last quarter. Volume is expected to fall at an even faster rate over the next three months.
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