THE UK financial services sector has achieved faster growth in business volumes in the first quarter than it had expected but expansion is projected to slow over the coming three months, a survey shows.

The Confederation of British Industry and accountancy firm PricewaterhouseCoopers, publishing their latest quarterly survey of the sector, say the forecast slowdown in growth suggests “firms remain cautious over the outlook”.

Profit growth was robust in the first quarter, the survey signalled. However, firms expect profitability will improve more moderately in the coming three months.

The survey signalled sentiment in the UK financial services sector has stabilised in the three months to March, having deteriorated sharply throughout 2016. Sentiment was unchanged in the banking sector, but the CBI and PwC noted this followed four consecutive quarters of decline.

Building societies, life insurers, insurance brokers and investment managers felt more optimistic than in the previous quarter, the survey showed. However, finance houses and general insurers were less confident.

Andrew Kail, PwC’s head of financial services, said: “The survey shows that sentiment has now stabilised among firms, but clearly the economic and political backdrop is affecting how companies feel about the future.”

He added: “With the triggering of Article 50 just days away, the UK’s financial services industry will have to start activating contingency plans to deal with life outside membership of the European Union. As negotiations begin and transitional arrangements emerge, these plans will need to adapt to ensure companies respond to protect and evolve business models.”

The survey signalled a slight acceleration in employment growth in the UK financial services sector in the first quarter. A stronger increase is projected in the coming three months.