According to a survey by the Lloyds Bank Commercial Banking, 70% of firms hold the concern compared to only 23% last year.
Brexit is still seen as the biggest cause for concern, with 55% of the 107 executives surveyed saying they are worried about the effects of leaving the EU and 28% stating it is the most significant risk they are facing over the coming year.
Robina Barker Bennett, head of financial institutions at Lloyds Bank, said, “As the biggest industry in the UK, the financial services sector is a crucial bellwether for the nation’s economic prospects.
“Fears about Brexit are looming large as the final countdown begins to March 2019, but our survey suggests that the UK economy will prove to be resilient and that it will come through the challenges of the next few months relatively unscathed,” she added.
“There is, however, a real risk that our growth will be slower this year than in all other advanced nations; and that we will fall to the back of the G7 pack.”
Nearly one quarter (24%) of respondents said they are now less optimistic about Brexit than they were 12 months ago, while 62% said their opinion has not changed.
When considering the UK’s withdrawal from the EU, 48% of executives said cross border access would cause them the most concern if not agreed during this year. Other concerns are regulation and regulatory equivalence (25%) and the UK-EU trade deal (10%).
Away from Brexit, c-suite and senior leaders said they were concerned about economic uncertainty (35%), regulatory implementation (31%) and market volatility (24%).
However, 64% of them still expected their revenues to increase this year, and 88% believe the UK will remain the most prominent hub for financial services, once the UK leaves the EU.
Still, 26% of those surveyed expect their operations to move elsewhere – up from 18% in 2017.
Bennett added, “Despite the worries about growth prospects; the lack of clarity about the final deal; and the speculation about the future of the financial services industry, the sector is upbeat about its growth prospects and long term future. There is an unmistakable confidence that the UK will hold on to its position as the single most important hub for financial services in Europe.”
Also today, The Institute of Directors reported that business leaders’ confidence in the UK’s economy was at it highest in March since Theresa May triggered Article 50 last year. Optimism in the economy was negative since April last year, entering into positive territory last month at 1%, while confidence recovered from -24% in December to -2% in January.