Business

Brexit: Some City firms 'more gloomy after EU vote'

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UK financial services firms are becoming more pessimistic about their prospects in the wake of the Brexit vote, an industry survey suggests.

Optimism fell for the third consecutive quarter according to the CBI employers group.

It is the sector's longest period of falling sentiment since 2009 - in the midst of the financial crisis.

The survey of 115 companies found low interest rates and potential restricted EU market access were seen as risks.

But while 28% of the respondents were gloomier, 15% were more optimistic.

And almost 40% of the firms surveyed reported healthy profits in the last quarter.

'Clear direction'

Rain Newton-Smith, the CBI's chief economist, blamed the dip in sentiment on the "uncertainty caused by Brexit to low interest rates, technological change and strong competition".

She called on the chancellor Philip Hammond to "set a clear direction for growth and prosperity" in his Autumn Statement in November.

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Image caption Britain's manufacturing industry employs 2.7 million people, the EEF says

"With firms voicing strong concerns about the impact of Brexit, especially the risks to the wider economy in the years ahead, the government must allay their unease with clear plans for negotiations to leave the EU," Ms Newton-Smith added.

The CBI campaigned for Britain to remain in the EU ahead of June's referendum.

'Growth and investment'

Meanwhile, a separate report by the manufacturers' organisation EEF found that the UK's industrial sector had continued to strengthen in 2016, and British firms had created more jobs than equivalent companies in other developed counties, with the exception of the US.

Manufacturing only accounts for around 10% of the UK economy, but Lee Hopley, EEF's chief economist, said the sector's success was vital to the country's overall growth.

"This is especially important in a post-Brexit world," Mr Hopley added, "where we have to look at possibly all new avenues of generating growth and investment".

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