Chancellor Rachel Reeves is facing more warnings of a fall in economic activity as business volumes in the financial services sector fell at the fastest rate since December 2023.

Second quarter figures for 2025 also show optimism declined at its steepest pace for almost two years.

The CBI Financial Services Survey survey, conducted between 29 May and 16 June, found that FS firms expect activity to stabilise next quarter, with volumes set to be broadly unchanged.

However, headcount is expected to decline at a rapid pace, and investment intentions remain poor – reflecting heightened economic uncertainty and the ongoing impact of last year’s Autumn Budget measures.

Key findings:

• Business volumes declined in the quarter to June at the fastest rate since Q4 2023.
• Optimism fell sharply in June, at the steepest pace since September 2022
• Profitability declined at a steeper pace in the quarter to June relative to March
• Headcount fell in the quarter to June. Firms expect headcount to decline at a significantly steeper rate in the three months to September.
• Firms expect to reduce investment in land & buildings and vehicles, plant & machinery over the next 12 months

Alpesh Paleja, deputy chief economist at the CBI said: “In light of our latest survey data, we look forward to the Financial Services Growth & Competitiveness Strategy and urge its swift implementation to bolster the UK’s competitive edge.

“But firms facing continued economic uncertainty now will be looking ahead to the Chancellor’s Mansion House speech and to the Autumn Budget for reassurances, particularly that the burden of potential tax rises doesn’t fall squarely on their shoulders.

“Given the Employment Rights Bill also poses further pressure on firms, it’s critical that government give financial services the clarity and confidence needed to achieve its Growth Mission.”

CFOs more optimistic

A contrasting outlook is presented by Deloitte’s survey of chief financial officers. It says the UK has overtaken the United States and Japan as a more attractive country to invest in.

Business directors have turned more bullish on the UK as a country to invest in and have a bigger appetite for risk, it says.

The quarterly survey, which canvasses opinion from the finance chiefs of 61 of Britain’s biggest companies, found that executives viewed the UK and India as the most attractive destination when it came to investment, with a net balance of 13% of respondents describing Britain as very or somewhat attractive.

This a marked improvement from the end of last year, when the UK was in sixth place, behind the US, India, the Middle East, emerging Europe and Japan.

Richard Houston, senior partner and chief executive of Deloitte UK, said: “This renewed confidence, coupled with a rise in risk appetite, is welcome and underscores the considerable investment potential the UK offers.”