Britain’s financial services firms experienced the fastest turnaround in fortunes for the sector in 30 years, in a surprise boost for the government.
After a pretty miserable end to 2025, business volumes at City firms rebounded impressively in the first quarter of 2026.
According to the latest findings from a long-running survey by the Confederation of British Industry (CBI), nearly two-thirds (65%) of banks, insurers and investment managers said their businesses were growing.
This was up from a negative balance of -38% in December, marking the fastest turnaround in fortunes for the financial sector since December 1996.
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The positive growth looks set to continue as well, at a pace of +51% over the second quarter of 2026.
The CBI’s quarterly survey was carried out between 27 February and 18 March 2026, so included the start of the war in Iran. However, it is possible some respondents did not expect the conflict to carry on for as long as it has, so therefore may not have appreciated the full scale of the energy crisis it could cause.
Either way, the findings will be a welcome boost for Chancellor Rachel Reeves, with the financial sector at the heart of her plans to increase GDP growth.
Alpesh Paleja, the CBI deputy chief economist, said: “Financial services firms saw a sharp recovery in business volumes at the start of 2026, which helped drive a rebound in sentiment. Activity is expected to remain strong next quarter, but investment intentions remain mixed as concerns about demand uncertainty rose to their joint-highest since 2012.
“The sector still appears to be digesting the implications of conflict in the Middle East. This is not surprising given that financial services firms are at the epicentre of volatile market moves, and that the economic impact of the conflict is still crystallising. ”
He called on the government to “double down on delivering the Financial Services Growth and Competitiveness Strategy” in order to “navigate through these uncertain times.”