Finance industry

Finance in 2022: gusty tailwinds

As part of our industry outlook for 2022, EIU has taken a look at the growth prospects, top risks and key trends facing the financial service sector next year.

Financial firms look set to benefit from the global economic recovery that the EIU forecasts to continue into 2022. Economic recovery and rising interest rates will boost prospects for many financial firms in 2022, provided bad loans remain at manageable levels. However, developing markets will take longer to regain their appeal than developed ones. 

The financial sector survived the pandemic in pretty good shape, in part because of the rules put in place after the global financial crisis. Bad loan ratios actually fell in 2020. But even with many countries starting to push up interest rates, banks will struggle to increase their margins on savings and lending.

Steven Leslie, Lead Finance Analyst at EIU

Key things to watch for in 2022:

  • End of the LIBOR era: The world’s financial markets are set to swap out their most important set of interest benchmarks—the London Inter-Bank Offered Rate (Libor)—for new bond issues and loan contracts, starting in January 2022.
  • US will tighten regulations on cryptocurrencies: Still reeling from the impact of a complete ban in China, crypto companies face further hurdles in early 2022, as the US Securities and Exchange Commission (SEC) takes a closer look at this volatile industry. 
  • Climate finance will gain greater prominence: In 2022 policymakers and industry players will seek additional tools to hasten the transition to green energy. 
  • UK may lose its hold over Euro-swaps clearing: Historically, London has been the global hub for clearing of swap contracts (a vital corporate hedging tool) but, now that the UK has left the single market, the EU will not want this prominence to continue. 

For more insights into how the consumer goods and retail sector will fare next year, download our “Finance in 2022” report.