Business leaders in the financial services sector are “optimistic” going into 2024, according to new research published by KPMG UK.

A survey of senior executives, among 160 UK adults who are director level in financial services companies, found that 87% are “confident” when it comes to overall business growth in the first quarter of 2024 – supported by a buoyant outlook on profitability for the quarter (83%).

Those working in banking, asset and wealth management are the most optimistic about business growth in Q1 of next year (89%). This was followed by insurance executives (79%), who continue to face challenges with reinsurance capacity and supply chain inflation.

KPMG also found that while a majority (61%) have a broadly positive outlook for the UK economy going into 2024, more than half (56%) believe inflationary pressures will still pose the biggest challenge for their business in the first quarter. This was followed by 46% citing interest rates as the most pressing challenge

While more than a third (37%) believe cost pressures will be their biggest issue, 85% are confident they can manage business costs, such as rising energy bills, throughout the quarter.

Despite ongoing political uncertainty and ongoing conflicts around the world, geopolitical risks were ranked lower than economic concerns, with just 21% believing this will pose the greatest challenge to their business in the first quarter.

“It’s great to see financial services leaders go into the new year feeling confident despite ongoing economic turbulence, which is set to continue to challenge the sector in the first quarter,” commented global and UK head of financial services at KPMG, Karim Haji.

“While on the surface, leaders seem less concerned about the specific impact of geopolitical uncertainty, there’s no denying that it is in part adding to inflationary and interest rate pressures. With interest rates set to stay high in a bid to tackle persistent inflation, combined with the added uncertainty of looming elections in the UK and USA, it will be interesting to see what impact this has on sector confidence beyond the first quarter.”

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