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By Huw Jones
LONDON, Oct 1 (Reuters) - The threat of a no-deal Brexit has
sent profits and sentiment in Britain's financial services
falling at their fastest pace since the global financial crash a
decade ago, a CBI/PwC survey showed on Tuesday.
The latest quarterly survey by the CBI, a business trade
body and consultants PwC, said that in the three months to Sept.
30, the level of business activity at banks fell at its fastest
pace in 28 years.
Banking, insurance and investment funds bring in billions of
pounds in tax revenues for the British economy, but direct
access from London to its most important market, the European
Union, could be blocked if there is a no-deal Brexit on October
31.
The quarterly survey of 83 firms found that optimism about
overall business in financial services fell at the quickest pace
since September 2008 when the Lehman Brothers crash deepened the
2007-2009 financial crisis.
The level of optimism has now been flat or falling for 15
consecutive quarters.
"The sector is the jewel in the crown of the UK’s
world-leading services industry," said CBI Chief Economist, Rain
Newton-Smith.
"While it’s encouraging that investment plans have improved,
the threat of a ‘no deal’ Brexit is hitting confidence."
Britain has yet to secure a divorce settlement with
Brussels, with only a month to go before it leaves the EU.
Financial firms in Britain have spent millions of pounds
opening hubs in the EU to cope with whatever form Brexit takes.
Profits fell at their quickest pace since June 2009, but
headcount in banking grew at the fastest pace in since December
2006, probably due to increased regulatory requirements, the
survey showed.
Andrew Kail, PwC's head of financial services, said there
has been a drop-off in plans to launch new products and services
as firms batten down the hatches in expectation of a turbulent
few months.
Looking ahead to the December quarter, business volumes are
expected to fall further, the survey showed. For the coming
year, new regulation, Brexit, IT spending and customers
switching to rivals would hit business most.
(Reporting by Huw Jones. Editing by Jane Merriman)
