The latest financial services survey from the CBI and PricewaterhouseCoopers shows that 44 per cent of firms saw a fall in profitability in the last quarter, compared to 18 per cent in March.
Fifty-five per cent of firms say business volumes have decreased in the three months to June, with only 20 per cent reporting an increase. PwC says the outlook for the next quarter is bleak, with 44 per cent expecting business volumes to fall further.
CBI Chief Economic Adviser Ian McCafferty says conditions look set to remain difficult for some time yet.
He says: “”Profitability in the sector is being badly hit, so firms are trying hard to trim costs by planning to cut back on training and marketing for the first time in a number of years.
“The problems of the financial sector will echo throughout the wider economy and will drag economic growth down this year and next.”