Government’s growth plans give financial services leaders optimism for 2025
Seven in ten financial services leaders are confident that the government’s plans for the sector will boost growth and competitiveness.
70% of financial leaders believe government plans will boost growth and competitiveness
- Seven in ten financial services leaders are confident that the government’s plans for the sector will boost growth and competitiveness.
- More than two thirds of leaders are also confident that the Chancellor’s plans for regulatory reform and the launch of a Financial Services Competitiveness Strategy will help the sector attract foreign investment.
- Leaders are also more confident about business growth and profitability in the first quarter of 2025 compared to Q1 2024.
- More than half of leaders say they plan to accelerate hiring in 2025, but talent availability and national insurance contribution concerns loom.
Seven in ten financial services bosses are confident that the government’s plans for the sector will drive growth and competitiveness in 2025, according to KPMG’s latest UK Financial Services Sentiment Survey.
The quarterly poll, which tracks sentiment among over 160 leaders working across the sector, also found that more than two thirds (68%) are confident that the Chancellor’s plans to ‘regulate for growth’ and launch a Financial Services Competitiveness Strategy in the Spring will help to attract foreign investment into the sector.
More than a third of leaders are very confident that the government’s plans will enhance the UK’s position as a leader in sustainable finance and fintech.
Those with lower degrees of confidence in Labour’s plans highlighted challenges related to Budget decisions such as national insurance and tax increases.
Karim Haji, Global and UK Head of Financial Services at KPMG, said:
“Financial services is the backbone of the UK economy, so it’s encouraging to see leaders go into the new year with optimism about the government’s growth plans for the sector.
“However, there are still concerns related to the impact of the Budget on growth in financial services. In the first half of 2025, the sector will want to see more details on the government’s competitiveness strategy to really understand how the Chancellor is proposing to work with them on strengthening the UK’s attractiveness as a global financial centre.”
Business confidence has improved in the last 12 months despite ongoing inflation and interest rate concerns
Financial services leaders are more confident about profitability and business growth for the first quarter of 2025 than they were twelve months ago. 94% are confident about profitability in Q1 2025, an eleven percent increase from 83% in Q1 2024. Leaders are also marginally more confident when it comes to overall business growth, with 91% feeling upbeat for the first quarter of 2025 compared to 87% in Q1 2024.
This optimism is buoyed by a more positive outlook for the economy, planned technology investment and expansion plans into new markets and product areas.
Despite high levels of optimism, most leaders are going into 2025 concerned about inflation pressures (52%) and interest rates (41%). Regulatory pressure has overtaken cost pressures to become one of the top three concerns, with 40% citing this as one of the biggest challenges facing their business moving into 2025 compared to 29% this time last year.
Geopolitical risks and pressures related to ESG performance were ranked by the least number of leaders (24% respectively) as the biggest challenges heading into the new year.
Hiring set to accelerate in 2025 but talent availability and national insurance concerns loom
More than half (55%) of leaders say they plan to increase hiring in 2025, 17% of which are planning a significant recruitment drive. More than a third (35%) expect to maintain current hiring levels in 2025.
When it comes to the levels of experience that financial services businesses will be most focused on hiring for in 2025, junior management was cited by most (41%) as the biggest area of focus for hiring, followed by middle management (32%) and apprentices (22%). Chief executives and other board members were ranked by just 13% as the area of most focus for hiring next year.
Almost a third of leaders said that being able to attract qualified candidates will have the biggest impact on their hiring plans, followed by more than a quarter (26%) citing increased national insurance contributions as having the greatest impact. 23% said the current economic environment will place the biggest impact on their recruitment in 2025.
In 2025, leaders will be most focused on acquiring skills in business and financial acumen, artificial intelligence and data analysis through both hiring both from within and outside of the sector and upskilling staff.
Karim concludes: “2024 has been a challenging year with financial services firms facing the headwinds of higher interest rates, inflation and geopolitical uncertainty. However, the sector goes into the new year with optimism about growth and profitability, coupled with strong intentions around hiring. Leaders are making a clear play for data and artificial intelligence skills from talent both within and outside of the sector as they look to bolster their business models. It’s encouraging to see leaders focusing hiring plans on junior levels, including apprentices, in 2025.”
-ENDS-
Methodology
Online quantitative research conducted by Opinium on behalf of KPMG between 10th – 13th December 2024 of 161 UK adults who are director level in financial services companies.
For further information please contact:
Petra Shuttlewood
E: petra.shuttlewood@kpmg.co.uk
M: +44 (0)7935 350724
About KPMG UK
KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 18,000 partners and staff. The UK firm recorded a revenue of £2.96 billion in the year ended 30 September 2023.
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