Online business only bright spot for UK financial sector

Online business only bright spot for UK financial sector

UK financial services firms have reported the fastest growth in the value of online business for two years, according to the latest quarterly survey by the CBI and PricewaterhouseCoopers.

While the rise in online business volumes remains below expectations, it marks a significant improvement from the CBI's previous quarterly survey which indicated a slowdown in Internet activity.

The results are the only bright spot for the financial services sector, which reported its steepest quarterly fall in overall business volumes for a decade.

The CBI says the decline hides differences between individual sectors in the industry. General insurers reported the biggest growth in business volumes with every respondent seeing an increase. Finance houses also experienced a significant rate of growth, but substantial declines were experienced by fund managers, life insurers, insurance brokers and stockbrokers.

John Hitchins, UK banking leader at PricewaterhouseCoopers, comments: "The industry ended 2002 in a worried frame of mind, reflecting growing concerns about a slowdown in personal sector business and specific fears on the state of the housing market. More jobs are likely to be lost in 2003 as firms grapple with their cost bases in the face of uncertain income prospects."

The research found employment levels falling for the first time since March, but by less than had been expected. Employment is expected to decline more severely over the next three months, says Hitchins.

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