Even with rise in business volumes, British financial services (FS) firms continue to remain less positive about the future. The period ending three months to September 2017 marks the longest run of falling sentiment since the global financial crisis of 2008, according to the CBI/PwC Financial Services Survey.

The study found 12% of firms more optimistic about the overall business situation in the quarter to September compared with three months ago, while 18% were found to be less optimistic. Banks and building societies were found to be less optimistic, while finance houses, life insurers and investment managers were more optimistic compared to the previous quarter.

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The drop in optimism contrasts business volumes, which increased for 28% of the firms and decreased for 15% of the firms. Firms also expect to speed up the growth in business volumes next quarter, with 34% of the firms expecting them to increase and 7% expecting them to decline.

However, overall profitability decreased in the quarter, with 27% of firms reporting a rise in profits and 14% reporting otherwise.

Further, 28% of the firms said they increased headcount during the period, while 29% said the contrary. Firms also said they plan to increase the pace of hiring in the next quarter.

The study also noted that firms plan to increase investment in IT spending, marketing, land and buildings, as well as vehicles, plant and machinery in the year ahead.

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Regulation, competition, and level of demand were highlighted as potential impediments to business growth over the coming year.

The study also found concerns easing over the deterioration in financial market conditions, with 17% of the firms expecting a low likelihood to a worsening in financial market conditions over the next six months and 6% expecting it to be highly likely.

Also, over two-thirds of the firms said it was critically important to retain the UK’s place as a leading fintech and innovation centre, while 67% believed access to global and domestic talent as critically important.

CBI chief economist Rain Newton-Smith said: “While demand in the sector is expected to hold up in the near-term, we can’t ignore the fact that optimism has dropped in almost every quarter for the past two years. With Brexit uncertainty affecting the wider economy, it’s vital that substantive progress is made during the next round of Brexit negotiations, so that transitional arrangements can be agreed and businesses can make decisions now about investment and employment that will affect economic growth and jobs far into the future.”