Business volumes in UK financial services grew for the first time in two years during the final quarter of 2020 when firms shed staff and remote working in the pandemic spurred reviews of office space, a survey showed on Wednesday.
The latest Financial Services Survey published by employers’ body CBI and compiled by consultants PwC, was completed before a third lockdown was introduced in England from January. “Unfortunately, the health and economic picture has sadly deteriorated since with restrictions tightening again,” said Rain Newton-Smith, chief economist at the CBI.
A trade deal with the European Union came into effect on Jan. 1 but does not cover financial services, which is being handled separately by Brussels under its “equivalence” system. The EU was the City of London’s biggest customer.
“Meanwhile, work must continue on using existing pathways with the UK Trade and Cooperation Agreement to reach better outcomes for the financial services, particularly on equivalence,” Newton-Smith said. Firms expect business volumes to grow at a slightly quicker rate in the first three months of 2021, the survey said.
They also expect to cut headcount further this year, with remote working prompting them to consider redefining, reconfiguring or cutting existing office space. Many financial firms in London have opened hubs in the EU as they don’t expect the bloc to grant much direct access under equivalence.
Consultants EY has said that over 7,500 financial jobs have already left Britain for the EU. “More work is yet to be done on the movement of people into roles in the EU and the migration of client contacts,” the survey said.