UK economic slowdown looms

Dhaka,  Sun,  20 August 2017
Published : 11 Aug 2017, 21:35:29
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UK economic slowdown looms

Warns Britain's biggest building society
The boss of Nationwide, Britain's biggest building society, has warned that banks and building societies will have to "balance carefully" the way they lend to squeezed households as a possible economic slowdown looms, reports Sky News.

Chief executive Joe Garner said that while consumers were becoming more worried about the UK outlook, which has turned gloomier as Brexit approaches, most did not see the fall-out from the EU referendum affecting their access to borrowing.

But he said it was important for lenders to weigh the supply of loans carefully against affordability to support demand from consumers "in a responsible way" through a slowdown.

Mr Garner made the comments as Nationwide reported a 20 per cent fall in pre-tax profits to £322m for the quarter to the end of June, partly due to one-off gains made in the same period last year.

Gross mortgage lending slipped to £8.1bn from £8.6bn, in part because of changes impacting the buy-to-let market including stamp duty reforms.

Nationwide said competition for lending to consumers "remains intense", meaning there could be "limited downward pressure" on its key profit margin for the rest of the year.

The building society saw 202,000 new current accounts opened, up from 173,000 in the same period last year.

Meanwhile, impairment losses from loans and advances that could not be paid back more than doubled from £16m to £36m.

Nationwide said that, like most forecasters, it expected the economy to slow a little this year as rising inflation squeezes household budgets.

Mr Garner said the public had become "less optimistic about the outlook for the economy generally" but that its research showed "the majority of consumers expect Brexit to leave their ability to access credit unchanged".

He added: "It will be important for lenders to balance carefully credit supply with affordability as we seek to support the long-term interests of consumers in a responsible way through any potential economic slowdown ahead."

The remarks come in the wake of concerns expressed by the Bank of England, which has given UK lenders a September deadline to show they are adequately protected against risks as borrowing soars.

UK economic growth has been sluggish in the first half of this year, with GDP growing by just 0.2 per cent in the first quarter and 0.3 per cent in the second.

The slowdown is largely attributed to a squeeze on consumers after the plunge in the pound after the Brexit vote drove up the cost of imports resulting in a sharp uptick in inflation.
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