Biodiversity in the Financial Sector
Finance and Insurance are two of the most important finance sectors, with almost a quarter of overall UK gross domestic product (GDP). Finance can be broadly divided into three main sectors: Public sector/regulatory, private sector and investment. The three sectors differ in many ways; for instance in relation to size, scale of operation, focus and scope of activities, regulatory requirements and costs, profits and losses, ownership structure, etc.
With the global economic recession has taken its toll on finance markets, it is time to review and reassess the performance and future of these three sectors. In this piece I will outline some key issues that should be of particular interest to all businesses and start-ups, as well as current business owners looking to expand their current reach and create a broader customer base. In the past few years, new businesses have grown in number at an impressive rate. Although the level of growth was faster than in previous years, the pace of growth in recent months and years has declined slightly. This is largely due to the impact of the global credit crunch that took its toll on the finance market, with lending being tightened and the cost of borrowing rising.
As a result, many lenders are reluctant to provide credit, with many commercial borrowers also being unable to meet their ongoing financial obligations. Lenders are now focusing increasingly on reducing their overall exposure to risk and are removing some of the perceived risks from investment products such as commercial mortgages and commercial finance. As a result, commercial lenders have scaled back their activity in the finance sectors and have pulled out of many commercial lending markets, or have ceased trading altogether. This has led to a sharp reduction in the availability of finance to small businesses. As the finance market becomes more competitive and banks become more cautious, it is likely that the share prices of mainstream banks and building societies will fall.
The decline in the finance sector has created a significant opportunity for those with an ambition to change the state of the finance sector, through supporting the sustainable development of the finance sector and increasing access to finance for the disadvantaged. The finance sector provides a range of jobs for civil servants, finance industry professionals and graduates who are looking for a career change. At present, the sustainable development agenda for the UK has been held back by the large number of job cuts announced by the finance sector. However, these cuts are set to begin to impact on the implementation of the sustainable development agenda over the next year or so. In order to implement sustainable development and to ensure that it is effectively implemented, it is vital that the finance sector is keeping healthy and able to adjust to changes.
By ensuring that finance sectors retain key roles in providing finance solutions and driving the sustainable development agenda, it is hoped that the current difficulties experienced by the finance sectors will be short-lived. Many of the finance sectors in the UK are now looking for ways to strengthen their position and regain market share. By creating a number of job opportunities and enhancing competitiveness through re-allocation of activities to ensure better value for money, the finance sector can ensure that it continues to deliver a positive contribution to economic policy. Many of the current problems being experienced by the finance sectors include an increased focus on reducing costs in an effort to remain competitive. The introduction of a number of processes and policies to control and contain costs has resulted in a number of developments over recent months, which have helped to ease the burden on the sector.
In February, finance sectors will be subject to a review covering every single one of their activities in the delivery of public service. This includes leasing, finance, taxes, duties, leasing services and leasing finance. Following this review the role of the finance department will be reviewed again in March to see if the organisation still fits with the government's policy framework. In addition to this the role of leasing will be reviewed to see if leasing activities fit with the leasing budget. In the summer, a final report on leasing activities will be published.
Throughout the past few months leasing activity in the UK has continued to grow at a fast pace, due to the ongoing need for commercial space and investment. In this time of economic change and uncertainty in the finance sector there is a growing need for commercial property. Many organisations are looking to partner with other businesses to provide them with access to new business finance. Many lease agreements are based around the current commercial cycle in the UK, which is currently based around the "adjustable" credit cycle. In order for lease partners to find new financing options, it is necessary for the finance industry to keep up with the market and react quickly when the lending conditions change.
The biodiversity of finance changes dramatically throughout the year. Spring is generally associated with heavy rainfall, which can cause flooding. Autumn brings migration from warmer climates, but also an increase in the levels of chemicals in the air from agriculture. Summer can bring bumper harvests and a sharp drop in outdoor temperatures, combined with a period of calm from rainfall. Autumn and winter can bring cold winters, but the combination of all of these events means that it is much harder for financial institutions to access the finance they require during this time.