UK - Activity in the UK financial services in the last three months was lower than expected, despite increasing at the fastest rate since the onset of the credit crunch, prompting concerns over the outlook for the London office market.

The latest financial services survey from CBI and PricewaterhouseCoopers (PwC) shows companies still consider levels of business to be well below normal, despite a recent pick-up in activity.

Financial services saw its fourth consecutive quarter of improving profitability, though the survey found that companies in the sector expect this to level off in the coming three months.

Concern about the impact of regulation and legislation on future business remains high, with a large proportion of companies expecting to spend more on compliance in the coming 12 months.

Asked how their business volumes fared in the three months to June, 38% said volumes rose, while 29% said they fell.

The resulting balance of +9% is the most positive since September 2007, but was far weaker than expected.

In the next three months, a balance of 63% expects a rise in business volumes, the most positive expectation since December 1993 (+65%).

While banks were the only sector to see business volumes fall in the past three months, building societies and general insurers' volumes were largely flat.

Life insurers, finance houses and securities traders saw healthy increases in volumes, investment managers' business grew slightly and insurance brokers saw volumes grow for the first time since March 2009.

John Forbes, real estate industry leader at PwC, said the findings had important implications for UK real estate, particularly office markets in London and other provincial cities.

"The financial services industry is hugely important for the economic health of London, but also for other cities such as Bristol," he said.

"The real estate industry will be pleased to see continuing signs of recovery and, in particular, that this is starting to feed through into increasing headcount.

"Landlords are aware there is significant grey space currently rented by financial services clients, so a sustained and significant increase in employment will be needed before it feeds through into demand for larger premises."