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Profits steady but CFOs remain cautious

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30th Jun 2010
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The finance sector has had four consecutive quarters of improving profitability, but CFOs remain uneasy about the economic prospects for their companies over the next six months.

A survey from the CBI and PricewaterhouseCoopers shows that business volumes have risen for 38% of firms, while 29% said they had fallen. The balance of +9% is the most positive since September 2007, but far weaker than expected.
 
The industry is also more positive than at any time since December 1993, with a balance of 63% expecting a rise in business volumes over the next quarter. But the impact of regulation and legislation in future business remain concerns, with many firms expecting to spend more on compliance in the next 12 months.

Despite a positive start to the year, the outlook for the next six months remains mixed, according to figures from the latest Robert Half CFO Confidence Index. Less than a quarter of UK finance bosses feel more or slightly more confident about the economic prospects facing their firms over the next six months.

Private sector CFOs were slightly more confident than their public sector counterparts, with 21% saying they were more or slightly more confident, whereas just 12% of public sector CFOs felt the same.

Although financial forecasts looked bleak, the job market for finance professionals remains steady, with 80% of CFOs saying the number of permanent accounting and finance staff employer by their company will either increase or stay the same in the second half of the year. (Although this was down four points from January).

Rising workloads were a primary reason for taking on additional staff, while increased regulatory requirements were a key driver for almost of half of hiring firms. Audit and compliance professionals were the most in demand, and this trend looks set to continue.

"Firms hope that activity will strengthen over the coming quarter and are now planning to expand their staff numbers,” said John Cridland, deputy director-general of the CBI.

"A high proportion of firms are worried about the impact of prospective regulation on their business, and many remain concerned that red tape will hamper growth prospects in the year ahead. Firms have also become more worried about increased competition within the sector, particularly from new entrants and from overseas.
 
“The modest pick-up in activity in the financial services sector in the past three months fell short of expectations. But firms hope that activity will strengthen over the coming quarter and are now planning to expand their staff numbers.”

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