Upturn for insurers and banks

BANKS and insurers saw an unexpected recovery in business over the last three months, although the outlook remains uncertain, a survey shows.

PricewaterhouseCoopers and the CBI said financial services firms grew at rates not seen for two and a half years. Of 122 firms surveyed, 56% reported a rise, 13% a fall. Three months ago, only 35% of firms expected to grow.

Companies dependent on the stock market are still gloomy, but those lending to industry see signs of increased investment as businesses prepare for growing demand.

CBI chief economic adviser Ian McCafferty said: 'We are now seeing the first signs of a turn in the investment cycle. Looking forward, financial firms still anticipate a modest - rather than rapid - recovery.'

Research group Experian said UK companies' annual return on investment is at a lower ebb than in the early 1990s. Returns fell from 10.84% last year to 8.3% in the year to March.