Services industry gloomy after Brexit vote

Posted on August 30, 2016

Dark clouds form above construction cranes in front of No. 1 Canada Square, center, at the Canary Wharf financial, shopping and business district in London, U.K., on Tuesday, June 21, 2016. Financial and related services accounted for 11.8 percent of U.K. economic output, or 190 billion pounds ($278 billion), in 2014, and quitting the EU could cost as many as 100,000 jobs in the sector by 2020, according to industry group TheCityUK. Photographer: Simon Dawson/Bloomberg©Bloomberg

London’s banks and brokers are under increased scutiny ahead of trading on Friday

The vote to leave the EU has damaged confidence in Britain’s dominant services industry but the impact on day-to-day business so far has been “relatively modest”, according to a new survey.

The report from the CBI business lobby chimes with other evidence that while companies are bracing themselves for leaner times, operations have continued much as before.

    Professional services firms, such as accountants and lawyers, are at their most pessimistic for more than five years on a range of topics from business growth expectations to expansion plans.

    But they also reported that business volumes and profits this quarter were mostly unchanged compared with the previous one.

    Anna Leach, head of economic analysis at the CBI, said that while confidence in the services sector had suffered, “the actual slowdown in growth on the office and shop floor has been relatively modest”.

    Economists are expecting growth to slow in the second half of the year as uncertainty caused by the Brexit vote takes its toll. But Howard Archer, chief UK economist at IHS Global Insight, said the economy had so far “held up better than we expected”.

    Mr Archer said he was increasing his growth forecast for 2016 to 1.9 per cent from 1.6 per cent “largely due to the current resilience of the consumer”.

    Separate statistics from the department of international trade showed that in the run-up to the vote, Britain attracted a record number of inward investment projects.

    International trade secretary Liam Fox said that the 11 per cent rise in the number of investments showed the “UK continues to be the place to do business”.

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