Business volumes in the financial services sector continued
to fall at a rapid pace in the final quarter of 2025,
according to the latest CBI Financial Services
Survey.
Additionally, profitability declined at a sharp
rate over Q4. The falls in business volumes and
profitability are likely to have contributed to a deterioration
in firms' sentiment in the three months to December.
The quarterly survey, conducted between 20 November and 9
December 2025, also found that FS firms
expect trading conditions to
improve somewhat in Q1 2026,
with volumes and profitability growth set
to recover. Headcount is anticipated to
decline slightly, after being flat in Q4. Investment
intentions for the year ahead remain mixed. Firms plan
to increase spending on IT while reducing capex
in land & buildings and plant, vehicles
& machinery.
Key findings:
-
Business volumes continued
to decline at a rapid pace in the quarter
to December 2025 (weighted balance of -38% from
-36% in September). However, firms
expect that volumes growth will recover
moderately over Q1 2026 (+18%).
-
Sentiment amongst FS firms deteriorated
in the three months to December, marking the sixth
quarter in a row of falling and/or flat
optimism (-20 from +3%
in September).
-
Average spreads were
broadly flat in the quarter to December (-2%
from -47% in September) but are set to
decline at a strong rate over Q1
2026 (-30%).
-
The value of non-performing
loans remained broadly unchanged in
the quarter to December (+1 from -1 in September)
and is expected to stay flat next quarter
(+1%).
-
Profitability declined over Q4 2025 at a
sharp rate (-53% from -13% in September). FS firms
expect profitability to recover modestly over Q1
2026 (+6%).
-
Headcount was broadly
unchanged over the quarter to December (-1% from
-24% in September) but is set to
decline slightly over the next three months
(-8%).
- FS firms expect to
increase investment in
IT over the next twelve months (compared to
the previous twelve), to the greatest extent since
September 2023. Capital expenditures on land & buildings and
vehicles, plant & machinery are expected to decline to a
slightly greater extent than the
previous quarter.
- Inadequate net return was the most commonly
cited factor expected to limit investment over the year
ahead (45% from 42% in September; long-run average
of 51%).
- There was a notable reduction in the share of firms citing
uncertainty about demand, dropping from a 13-year high in the
previous quarter to below its long-run average (38% from 69%
in September; long-run average of 48%).
- Just over a quarter of firms cited ‘other' factors as likely
to limit investment (27% from 26% in September;
long-run average of 8%), with comments continuing to
point to challenges arising from taxation and
regulation.
Louise Hellem, CBI Chief Economist,
said:
“Financial services firms reported a gloomy end to
2025, with sentiment deteriorating amid persistent
falls in business volumes and profits. But there are
early signs of stabilisation heading into 2026, with firms
expecting a moderate recovery in volumes in Q1 and a renewed
focus on investment in digital and IT capabilities to support
productivity, resilience, and long-term
transformation.
“Recent Budget decisions, including changes to stamp duty for
newly listed companies and avoiding a new banking levy, were
welcome steps. To turn cautious optimism into sustained growth,
the government must now focus on delivery and double down on the
Financial Services Growth and Competitiveness Strategy to unlock
investment, drive innovation, and reinforce the UK's global
edge.”
The full report is attached.
8 January 2026
Notes to Editors:
The latest Financial Services Survey was conducted
between 20 November and 9 December 2025. There
were 64 respondents.
A ‘balance' is the difference in percentage points between the
weighted percentage of firms answering that output is “up” and
the percentage answering “down” (for example, if 30% of firms say
that business volumes are up, 60% that they are unchanged, and
10% that they are down, the balance statistic is
+20%).
