UK – Fund management firms see improving business sentiment and expect to grow their headcount, according to a new survey.

“Fund managers report a second consecutive quarter of improving sentiment, reflecting robust growth in business volumes and continued growth in profits,” said the report from the Confederation of British industry and PricewaterhouseCoopers.

“The outlook is bullish; fund managers expect strong growth three months forward - albeit at a slower pace,” the report added.

It said: “Profitability grew strongly in the three months to March, though could not quite match the exceptional growth in the prior three months. Going forward, fund managers expect reasonably strong growth in profitability.”

It found that headcount expansion was rapid over the three months to March - consistent with the optimism within the sector. “Expectations are for an even faster employment expansion three months forward.”

And uncertainty about demand had become “much less of a constraint” to business prospects over the next year. Staff availability and system capacity have become greater constraints.

"The survey shows a mixed picture across the financial services sectors,” said CBI economic advisor Ian McCafferty. “Not all firms had a weak start to the year, firms tied in with the stock market, such as securities traders and fund managers have done quite well.

“By contrast, firms connected with the housing market, such as building societies and banks have experienced a more difficult climate. Though, like financial services as a whole, these sectors are looking forward to an improvement in the months ahead."

Elsewhere, the government has formally begun its consultation into the new £400m Financial Assistance Scheme.

Pensions minister Malcolm Wicks said: “Payments will be backdated to the date we announced the Financial Assistance Scheme (14th May 2004) or the recipient's 65th birthday, whichever is the later. These are likely to be in the form of a lump sum.”

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