Insider Media Limited

Activity in the UK financial services sector “grew strongly” for the second quarter in a row, according to research by the CBI and PwC out today.

Mark Smith, chairman for PwC in the Midlands, said the sector would play a “critical role” in releasing finance for corporate investment in the year ahead.

Fifty per cent of companies surveyed said that business volumes increased in the three months to December.

However, profitability did not increase as fast as expected, growing at the slowest pace for 18 months. The number of people employed in the sector fell at the fastest pace for 17 years, according to the latest CBI/PwC Financial Services Survey.

Asked how their business volumes fared in the three months to December, 50 per cent said that volumes increased and 23 per cent said they fell.

The survey results suggested that companies are planning to invest less over the coming 12 months, on land and buildings, vehicles, plant and machinery and IT.

Financial services firms have also become “more concerned about their ability their ability to raise funds over the coming year,” said PwC.

Mark Smith, regional chairman at PwC in the Midlands, said: “It is good to see that the financial services sector continued to report an increase in business volumes during the last quarter of 2010, even though the sector’s performance in terms of profitability was not as strong as expected.

“The financial services sector is an important constituent of the Midlands economy and its role in releasing finance for corporate investment will be critical in the year ahead.”