City blows away gloomy Brexit forecasts as profits soar at fastest rate since 2015

The City is blowing gloomy forecasts that Brexit would hit its financial services industry out of the water, reveals a fresh study released today.

Profits at the Square Mile’s biggest banks, brokers and insurers are accelerating at the hottest pace since before Brexit, according to the UK’s leading business group.

City firms’ resurgence will help expel bets on London losing its crown as Europe’s top financial services hub after Britain left the European Union. 

A brand new survey carried out by the Confederation of British Industry (CBI), in partnership with PwC, found profits at City firms are rising at the quickest rate since December 2015.

Meanwhile, activity in Britain’s financial services industry climbed at its fastest rate since 2017, the CBI and PwC found.

Booming deal making ignited by fast growing companies scrambling to float in London propelled business among the City’s banking giants higher.

Some 43 per cent of banks notched an uptick in business over the last quarter, while a majority of them are confident in the sector’s prospects.

Research by consultancy EY found London notched its best year for listings since 2007 last year, providing a boon for London’s top deal makers.

The City’s float volumes are set to rise even further this year after a fresh listing regime that is designed to attract fast growing tech companies and make the City more competitive on the global finance stage took effect last month.

Access to cheap financing amid a record low interest rate environment has lit a fire under deal making activity this year.

City private equity (PE) funds have rushed to unleash masses of dry powder accumulated before the onset of the Covid-19 crisis. 

PE firms launched 781 takeovers targeting British businesses last year, the highest since records began in 1980, according to Refinitv data. 

Global stock markets have climbed to record highs this year, providing a windfall for the City’s fund managers, 62 per cent of which registered a rise in profits over the last quarter.

Elevated float activity has been driven by investors pouring into equity markets in search of yield amid a record low interest rate environment.

Booming trading volumes among retail investors that have entered financial markets for the time during Covid-19 lockdowns widened liquidity on global markets, encouraging smaller private firms to go public in the process.