UK financial services sector rebounds in Q3 - CBI

(Sharecast News) - The UK's financial services sector showed signs of stabilising in September, a survey showed on Thursday, as firms partially rebounded from a tough second quarter. According to the Confederation of British Industry, business volumes fell in the third quarter, with a balance of -5. But that was at a far slower pace than the sharp decline seen in the previous three months, when the balance slumped to -58. Profitability also remained under pressure with a balance of -6, but it was a stark improvement on June's -65.

Sentiment picked up as a result, with the balance improving to -7 from -34, while headcount rose to 49 from 14.

Respondents were also more confident looking ahead. While volumes were expected to be broadly flat in the fourth quarter, profitability was slated to increase, with a balance of 35.

Louise Hellem, CBI chief economist, said there were signs of stabilisation following a "gloomy" second quarter.

She continued: "The fall in business volumes eased substantially, which was mirrored by a slower decline in sentiment.

"The easing downturn matters because the financial services sector is vital to driving investment, innovation and business growth across the economy. The Budget should set the agenda for a competitive and predictable environment that turns those reforms into tangible progress, unlocking domestic investment, deepening UK capital markets and helping more firms scale and grow."

Chancellor John Healey will present his first Budget on 28 October. He is under pressure to cut debt, rein in government spending and bolster sluggish economic growth amid a backdrop of mounting inflationary and cost of living pressures.

In his first conference speech as prime minister on Wednesday, Andy Burnham pledged to scrap the triple lock to pay for a new national care service - although not until the next Parliament - and insisted his plans to take greater control of public services were "pro-business".

However, there was little policy detail, and businesses remain concerned that the Budget could contain further tax rises.

The survey was conducted between 1 and 17 September, with a total of 63 firms responding.

A weighted balance is the difference between the percentage of firms stating output is up and those indicating it is down.