The latest CBI Financial Services Survey highlights a significant downturn in business activity and sentiment within the financial services sector. In the second quarter of 2025, business volumes fell at the fastest rate since December 2023, while optimism dropped sharply, marking the steepest decline since September 2022.
The survey, conducted between 29 May and 16 June, reveals that while firms expect activity to stabilise in the upcoming quarter, they also predict further declines in headcount and poor investment intentions, driven by ongoing economic uncertainty and the impact of last year’s Autumn Budget measures.
Key statistics show that business volumes decreased by 24%, a stark contrast to the 5% growth recorded in March. Despite this, firms expect volumes to remain roughly stable in the next quarter, with a slight increase of 3%. Optimism, however, plummeted by 55%, with firms anticipating modest profitability growth in the coming months.
Non-performing loans fell at the fastest rate since September 2021, while average spreads narrowed. The sector is also witnessing significant cuts in headcount, with a projected 52% reduction over the next three months. Investment intentions remain weak, with uncertainty about demand being the most cited factor limiting investment.
The financial services sector is now looking to the government’s upcoming Financial Services Growth & Competitiveness Strategy and further economic measures for reassurance amidst continued challenges.
