Financial services

Financial services

Ready for recovery

Cautious optimism is returning to the UK financial services sector, thanks to growing business volumes, rising profits and confidence in the longer-term economic outlook.

Healthier profits and new hires signal a new era for UK financial services, which saw its strongest growth for seven years in 2014. The 100th CBI/PwC survey of the sector hints at a new phase of recovery, with firms feeling more assured about demand levels and regaining a sense of competition as they turn their attention to new customers and business.

Sector at a glance

  • 1.1 million – The number of people employed by the financial services sector, or 3.8% of the UK’s total workforce
  • 60% of financial firms reported greater profits in the three months to September 2014, compared with the previous quarter
  • £65.6 billion in taxes were paid by financial institutions in 2013-14 – the highest amount since 2007


Britain’s banks are ready to lend

Commentary by Anthony Browne, CEO, British Bankers' Association

Small and medium-sized businesses are Britain’s engine for growth. They provide jobs, bind communities together and help fuel the economic recovery. That’s why it is vital that banks support those looking for finance and help them to realise their potential.

The news on SME lending in 2015 looks positive. The most recent survey by the SME Finance Monitor found that approval rates for financial applications are rising.

In the last 18 months, more than seven out of ten businesses had a “yes” from their finance provider, and almost half of all SMEs said they have plans to grow in the next 12 months. Against this backdrop, interest rates remain at historic lows.

“The key factor for a business is getting the right type of finance at the right stage”

The survey also found that fewer businesses now consider access to finance to be a major barrier to their growth in the next 12 months. Of greater concern were day-to-day issues, such as cash flow, and governmental factors like future policy and regulation.

The Bank of England’s figures reveal that from July to September 2014, £13.2bn of new SME borrowing was approved. This is almost 30% more than in the same quarter of 2013.

Banks are also offering SMEs a range of support options, including free mentoring services to help entrepreneurs grow their businesses. We have launched Mentorsme, Britain’s first gateway for SMEs looking for mentoring services, and it has reached more than 200,000 businesses and provides access to more than 27,000 mentors.

Meanwhile, the Better Business Finance (BBF) initiative – run by the major high-street banks – also provides important information and support.

The key factor for a business is getting the right type of finance at the right stage.

  • £13.2bn of new SME borrowing was approved July–September 2014

Bank finance, however, is not always the right option for every business. The banks will refer businesses that aren’t suited to bank finance over to Community Development Finance Initiatives, specialist peer-to-peer funders or equity providers. And over the next year, there will be further moves to build on the work that many banks are already doing, to broaden out referrals to alternative lenders.

The message is clear – Britain’s banks are ready to lend and there has never been a better time to approach them to see how they might be able to help.

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