Of course the financial services sector is not just about banks – as any of the other City types caught in the post-crash crossfire would be quick to remind us. In fact, the banks are actually letting the side down at the moment: last quarter their business volumes dipped slightly, while their total costs grew at the fastest rate for five years (both trends are expected to continue in the current quarter). But the sector managed to grow overall because volumes were up pretty much everywhere else, including for building societies, insurers and so on.
However, the balance of those reporting growth (as opposed to those reporting contraction) was just +17%; that’s well below expectations, and notably worse than the previous three quarters. And only 8% more of the study's respondents were expecting things to pick up in the next three months. So it's all the more surprising that employment is rising so quickly. 11,000 new jobs created in three months – that's the highest total since September 2007, and firms apparently expect to keep hiring in the months to come.
On the other hand, with Lloyds recently announcing 15,000 extra job cuts, the overall picture is not entirely positive. And until the banks get a handle on this lending issue, they're unlikely to win many new friends. According to a new survey from the Federation of Small Businesses, 20% of its members have tried to borrow from the banks in the last 12 months, and a third of them have been knocked back. That's 320,000 small businesses left short of the credit they need - not just to cover cashflow but also to invest in growth. (Remarkably, 16% of those refused a loan weren't even given an explanation.)
The big banks' latest PR wheeze is a new mentoring scheme for SMEs; the idea is to advise not just on finance but also on marketing, HR and so on. This is undoubtedly a good idea, at least insofar as it helps smaller firms to make a compelling case for loans. But until the banks start putting their money where their mouth is, they can expect a degree of scepticism – however many people they claim to be hiring.