Nine months after the end of the transition period, Brexit remains the biggest challenge facing Britain’s bankers.
Almost two-thirds of financiers say regulatory change is a significant risk to their business, as uncertainty around the U.K. regime weighs on the industry, according to a Lloyds Banking Group Plc survey of 111 executives in June and July. That compares to about half of respondents identifying cybercrime as a worry and 34% pointing to pandemic-related issues.
With little progress on a financial services deal with the European Union, just 1% of respondents expected the U.K. to secure equivalence from the bloc this year and 29% said an agreement would never be reached. Lobbyists for the industry have warned that the City needs to adapt its rules following Brexit or risk losing more ground to other financial hubs even as such a move will likely hinder access to the EU.
Those concerns were a sour note in a generally bullish outlook from the survey, with 88% expecting U.K. economic growth to improve over the next year, compared to a fifth last year and just one in ten in 2019. Two-thirds of respondents said they expected their revenues to increase.
Such optimism may have cooled since the survey was carried out, with concerns about inflation and supply-chain issues on the rise. A poll by the Institute of Directors published last week found leaders of small businesses were broadly negative about the economy.
The Lloyds survey also found that technology is the top strategic priority for financiers next year, with 79% of respondents citing the topic. About 59% of the executives identified sustainability as a key focus — the first time a majority of respondents have done so and up from a third last year.