Financial services industry’s confidence in the UK’s economic prospects at lowest level since 2012, says CISI survey

The financial services industry’s confidence in the UK’s economic prospects has fallen to its lowest level since 2012, the latest Chartered Institute for Securities & Investment (CISI) survey has shown.

Of over 600 respondents to the CISI’s online survey, 48% were less optimistic about the outlook for the UK than ten months ago, while 32% felt more optimistic with 20% unchanged. The CISI confidence indicator (sum of positives less sum of negatives) was -16% compared to 6% in January 2016.

The survey was conducted from 25 August-22 November 2016. There were 58 comments left by respondents, 63% of which contained the word “Brexit”.

Other concerns raised included the drop in the value of sterling, passporting implications, quantitative easing and Article 50. Comments included:

• “The UK has the capacity to capitalise on many opportunities from a drastic and changing situation. The Blair years demonstrated this. I’m very optimistic for the future of this country.”

• “I’m not convinced about the positive growth results as it appears to be short-term. I believe the long-term prospects might not be as positive.”

• Brexit will provide some short-term pain but in the long run, considering the rather likely collapse of the EU in the near future, we will be a much stronger economy.”

• “No clarity of detail on Brexit. Little internal political challenge. Little apparent benefit from the massive drop in sterling. We run a consistent trade deficit. External risks of higher protectionism from non-EU nations.”

• “We shouldn’t have left.”

• “The implications on passporting financial services concerns me.”

• “The fear which is gripping currency markets and driving exchange rates lower in the wake of the Brexit vote has not yet priced in the real impact of changes to come. Although the market has tested some lows in the dollar trade, there are still many shocks to come, and the uncertainty which this is breeding is going to have long-term and far-reaching consequences for the UK economy.”

• “The lack of interest from other countries in signing a trade deal with Brexit Britain ought to send a message to Fox, Johnson and Davis. Their lack of touch with reality is alarming.”

• “The Bank of England is behind the curve. The UK doesn’t need QE. There’s no recession. Brexit is political, not economic.”

• “The removal of uncertainty surrounding the EU referendum and the terribly inadequate political commentary which was typical of the campaign process, is a net positive, so marginally I’m more optimistic. I was confident in the UK’s economy to compete and be resilient in the global marketplace before the referendum and so did not fear an exit from the EU…I do feel more certain of that belief today.”

Simon Culhane, Chartered FCSI and CISI Chief Executive said: “There is no denying that Brexit has affected the industry’s confidence in the UK economy, generating concerns in particular on the issues of passporting and the drop in sterling. The outcome of -16% for confidence is low.  The recent result of the US Presidential election as a factor has hardly been mentioned by respondents but it may be too soon to for the effect of this result to come through in market sentiment.”

Respondents were asked to compare how they felt about the UK economy six months ago. The last time the CISI survey reflected a negative outcome was in autumn 2012 when the comparative figure was -1%.

The CISI has conducted the poll every six months since spring 2012, with the current figure reflecting economic confidence during a ten month period. The confidence level expressed peaked in autumn 2013, with a sum total of 54%.