Confidence in finance sector at record low

by Gill Montia

Story link: Confidence in finance sector at record low

The Institute of Chartered Accountants in England and Wales (ICAEW) has reported that confidence in the banking, finance and insurance sector is at a record low.

In the three months to the end of June, the Institute’s Business Confidence Monitor (BCM) for the sector fell to -37.6, down from -34.4 in the previous quarter.

By comparison, the overall BCM index declined from -19.7 in the first quarter of 2008, to -25.7.

The ICAEW’s executive director of operations and finance, Robin Fieth, described the latest indicators as painting a stark picture of the challenging business environment that has emerged in the UK over the past year, adding that projected staff and capital investment are both significantly down on this time last year.

Referring specifically to confidence in the banking, finance and insurance sector, Mr Fieth points out that business and financial services have tended to drive UK economic growth in recent years but that the sector is now showing actual quarter-on-quarter growth at just 0.1%.

Overall confidence is at its weakest since the survey began in 2003 in nine of the UK’s 11 regions, with the West Midlands least confident.

The ICAEW is predicting that inflation will begin falling back from early 2009, allowing the Bank of England to cut interest rates throughout 2009.