KPMG has released its latest UK Financial Services Sentiment Survey, showing that Scottish firms are more positive for the future of financial services following the general election.

The quarterly poll, which tracks sentiment among over 150 leaders working across banking, insurance, private equity and asset management in the UK, found that 75% of Scottish bosses were confident of growth prospects this quarter,.

This was driven by expected increases in demand for services and plans to enter new markets. The firms said the biggest obstacles to this potential growth in financial services were inflation and the challenges of keeping up with advances in technology.

To support predicted growth in the sector, Scottish leaders emphasised the need for greater investment in regional infrastructure and granting local government more powers to support financial services clusters.

KPMG’s survey also found that the majority of leaders (90%) plan to increase their footprint outside of London in the next five years. Over half (57%) plan to open new offices outside the capital with others saying they will expand existing regional offices.

Plans to expand in Scotland and the Yorkshire region were cited by 18% of those surveyed, while 23% said they intended to expand across the east of England.

Manchester was the city outside of London cited by most leaders (47%) as having the greatest potential to be the UK’s second city for financial services, followed by Birmingham (20%) and Edinburgh (11%).

More than a third of leaders (39%) said that the regional expansion of their global counterparts outside of London would most support financial services growth across the UK, while a quarter felt that greater investment in regional infrastructure would boost sector growth beyond London.

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Katie Clinton, head of regional financial services at KPMG UK, said: “This is a vote of confidence for the vibrant and fast-growing financial services hubs outside of London.

“Cities like Manchester, Birmingham and Edinburgh have long been snapping at London’s heels, so it’s great to see firms are also planning to increase their presence in areas outside of urban centres. This will not only offer a boost to more local economies, but help firms to benefit from a greater diversity of experiences and skills sets.”

Leaders also called out specific areas of focus to ensure sector growth over the next five years, with 23% saying innovation to help solve environmental and socio-economic issues was needed.

This was followed by 21% saying more effort was required to make the UK attractive to overseas talent through infrastructure investment, housing and immigration changes. 

Earlier this summer, new data showed the strongest pace of growth in the Scottish private sector for two years, with Scottish businesses optimistic about future growth under plans for digitalisation and marketing improvements.