Financial services activity falls in Q2 2025 – CBI

Financial services activity fell sharply in Q2 2025, according to the Confederation of British Industry (CBI) Financial Services Survey. 

Business volumes dropped by 24% in June, down from a 5% rise in March, the fastest rate of decline since December 2023.

The survey found firms expect business volumes to remain broadly unchanged for the next quarter, with a slight rise of 3% expected. 

Headcount in the sector fell by 7% during the quarter, after remaining steady in the previous three months. 

Firms expect headcount to fall much more sharply by September, forecasting a drop of 52%.

Profitability fell by 24% in the second quarter, compared to a 9% drop in March.

Uncertainty about demand was the most common reason for limiting investment, mentioned by 55% of firms, up from 42% last quarter and higher than the long-term average of 48%.

Almost half of firms, 45%, pointed to other factors likely to limit investment, up from 36% in March.

These included the volatile economic climate, regulation and measures from the last Autumn Budget.

Alpesh Paleja, deputy chief economist at CBI, said: “Conditions deteriorated in the FS sector over the second quarter, with business volumes falling at their fastest pace since late 2023 and sentiment dropping sharply. 

“Profitability was squeezed further, as firms faced narrowing spreads. 

“While activity is projected to stabilise next quarter, firms still expect to cut back on hiring and investment going forward.”

Paleja added: “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 the government give financial services the clarity and confidence needed to achieve its Growth Mission.”