A recent survey by CBI indicates that the British financial sector expects a gloomy outlook for the coming year even before the continuing coronavirus pandemic hit markets worldwide. Over the first quarter of this year, financial services companies in Britain reported a drop in profitability even as they reported a surge in non-performing loans.

Among the businesses surveyed, 27% reported a decline in profits while 24% saw their profits rise in Q1 2020. Meanwhile, bad debts increased at the fastest pace seen since September 2009; however, firms expect the pace of growth to slow down in Q2 2020.

Fears of an impending recession in the British and the global economy have impacted the business outlook for the sector over the coming year. 53% of businesses expressed pessimism about overall business conditions while only 12% anticipated an improvement instead.

High levels of business uncertainty are expected to drive investment lower in the near future among firms in the financial sector. While businesses indicated plans to increase their spending on IT, they maintain that lack of clarity about demand in the coming months could drive them to curtail other spends.