British financial firms hit longtime low

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Scott Jagow: The economy is certainly paying for the sins of banks. A new report out of Britain suggests the biggest financial hit in years. Megan Williams reports.

Megan Williams: After a long, smooth cruise upwards, British financial firms are now heading downhill. In last quarter of 2007, business for banks, brokerage and insurance companies slid to its lowest rate in more than 16 years.

Research by the Confederation of British Industy shows trading, investment and interest profits are all down. So is confidence that business will pick up any time soon. Confidence in the British service sector is also at a two-year low.

Peter Hemington of BDO Stoy Hayward says retail is the worst off:

Peter Hemington: It was a pretty tough Christmas for retailers, and there’s a big worry that with the housing market having gone negative and consumer dept at record high levels, you know, retailers are really going to struggle over the next 12 months.

But still, Hemington says the British economy is strong overall. He says the interest rate cut before Christmas has kept morale high for manufacturers.

I’m Megan Williams for Marketplace.