Profits 'tumble' at finance firms

Mr Cridland says early 2009 will likely be as bad as last year

Financial services companies have been hit by a record fall in profits, business organisation CBI has warned.

The warning came as a CBI survey of 87 such firms found that two-thirds suffered a fall in business between October and December of last year.

The study, co-conducted by accountancy firm PricewaterhouseCoopers, also found a sharp fall in vacancies and investment and training budgets.

It predicts a continuing decline in business, resulting in more job losses.

'Stark implications'

"2008 was the year the financial services industry would rather forget, and unfortunately, it looks set to remain under pressure in early 2009," said CBI deputy director general John Cridland.

As we move deeper into recession, we can expect further declines in activity PWC partner John Hitchins

"As income and profitability have tumbled, so there will be more job losses and cuts in investment, and stark implications for the rest of the economy."

PWC partner John Hitchins echoed that sentiment, saying the UK banking sector had seen its biggest fall since 1998.

"As we move deeper into recession, we can expect further declines in activity," he said.