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PwC expects short term falls

The financial services sector should expect a fall in business volumes, income and profitability over the coming three months in the wake of the credit crunch, according to CBI and PricewaterhouseCoopers.

The latest CBI/PricewaterhouseCoopers Financial Services Survey shows while business sentiment has fallen sharply and the sector expects a tougher quarter ahead, firms still plan to take on more staff, suggesting the industry expects to recover.

PwC says fund managers are highly pessimistic about their current situation.

Falls in business volumes and fee, commission and premium income were against expectations for marked growth and firms believe that further decline will be recorded next quarter.

The survey shows domestic demand was weak but business volumes from overseas customers continued to rise.

PricewaterhouseCoopers UK investment management and real estate leader Pars Purewal says after two quarters of improving sentiment, fund managers’ overall optimism has dropped.

He says: “Downbeat predictions for activity and income reflect concerns founded in the current financial market uncertainty. However, survey results show that there is no current indication that the third quarter will yield a particularly poor performance by this sector. In fact, retail and overseas activity is predicted to grow and profitability, although reported to have fallen during the quarter, is expected to recover despite planned expansion of cost bases and a strong focus on recruitment.”

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