OPTIMISM in the UK financial services sector has plummeted at the sharpest rate since September 2008 in the latest three months as the threat of a no-deal Brexit weighs heavily, a key survey shows

September 2008 is the month in which the global financial crisis took a lurch for the worse with the collapse of US investment bank Lehman Brothers.

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The survey of 83 firms, published today by the Confederation of British Industry and accountant PricewaterhouseCoopers, also shows sharp falls in business volumes and profits in the UK financial services sector over the last three months.

It signals firms’ optimism about the general business situation dropped at its sharpest pace since September 2008, with a broad-based decline across sub-sectors, with the exception of general insurers. The drop in confidence was particularly acute among banks and building societies.

The CBI noted optimism had now been either flat or falling for 15 consecutive quarters.

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Overall business volumes in the financial services sector fell further, and at the fastest pace since September 2012. Banks saw volumes drop at the sharpest pace since March 1991. And the survey signals profits in UK financial services fell at the sharpest pace since June 2009, with declines in the banking and building society sub-sectors and among finance houses.

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CBI chief economist Rain Newton-Smith said: “Quarter after quarter after quarter, optimism continues to drop...It’s clear something has to change...The sector is the jewel in the crown of the UK’s world-leading services industry...The threat of a ‘no-deal’ Brexit is hitting confidence.”