Job numbers and profitability are both at their lowest levels since 2003.

A recent financial services survey by the Confederation of British Industry (CBI) and PriceWaterhouseCoopers LLP (PWC) has revealed that profitability and job numbers have decreased dramatically within the financial sector over the last quarter.

The research has found that job cuts are at their highest since 2003, while profitability is at its lowest level since March 2003.

Firms also reported a sharp fall in business volumes and a record number of respondents reported a decline in the value of fees, commissions, and premiums. Both of these are expected to fall further in the next three months, while expectations for employment are at their weakest since 2002.

Ian McCafferty, CBI’s Chief Economic Adviser, commented on the credit crunch, which has worsened over the last three months: “The interbank markets have become more gummed up, with banks even more unwilling to lend, and credit spreads have widened.

“While liquidity injections and interest rate cuts by the Bank of England will help shore up the system, neither will solve the fundamental problem of restoring trust, so that credit markets are unlikely to return to anything like normality for some time to come. Even when they do, we will not see a return to the very favourable lending conditions that existed before August.”

Although banks have seen profits and job numbers fall, building societies were able to lift profitability over the last quarter by increasing their spreads and their volume of business. General insurers also witnessed strong growth, with business levels well above normal, while fund managers were the only sector to report optimism for the future and a growing workforce.