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Gloom enveloped UK financial sector as virus outbreak escalated: CBI

LONDON (Reuters) – Optimism drained away from Britain’s financial sector in March as the coronavirus outbreak escalated, an industry survey showed on Tuesday.

The Confederation of British Industry (CBI) said financial firms expected demand, profitability and employment to decline sharply in the coming months.

The survey also showed that early 2020 saw the biggest rise in the value of non-performing loans since 2009.

“The bulk of the survey took place before social distancing measures were ramped up, but there were already signs of the Covid-19 pandemic leaving its mark,” Rain Newton-Smith, CBI chief economist, said.

The Bank of England said last week that the coronavirus outbreak had not harmed the core of Britain’s banking system as the financial crisis did a decade ago.

Still, the central bank said it would publish an extra health check on Britain’s financial system on May 7, given the scale of the economic slump currently underway.

The CBI surveyed 103 firms between March 2 and March 26.

(Reporting by Andy Bruce; Editing by Susan Fenton)