UK financial services "set for post-Brexit boost"
EY's Item Club predicts that UK financial services will experience a "pronounced pick-up" after Brexit negotiations are completed.
UK financial services to have a "pronounced pick-up" post Brexit
UK financial services are one of the few areas of the economy to have a large trade surplus with the EU and the Item Club said the sector would experience a "pronounced pick-up" after Brexit negotiations were complete.That pick-up will see lending to industry top £430 billion by 2020, the report predicted, even though it forecast that overall business investment would decline this year. Mortgage lending is also expected to fall back this year and next, before recovering in 2019.Omar Ali, EY's financial services managing partner for the UK, said: "This is a key time for the UK’s financial services industry, just days from the triggering of Article 50."Brexit and wider geopolitics have injected a level of uncertainty and volatility we have not seen for some years but the fundamentals of the UK financial services industry remain strong."Lending is predicted to increase, perhaps not as much as we had hoped, but it is still growing. This is good news for the UK as a whole as it means financial services can continue to play an important role in supporting the growth of the wider economy."The return of inflation and the resulting impact on disposable incomes could have a dampening effect on demand for financial products - a 0.3% fall in real incomes may not sound like much but it is worth £3bn to the economy."Hopefully, this benign economic outlook will give the industry the confidence to invest in the future and help to keep the UK industry at the forefront of the global market."Related articles:
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The Item Club analysis coincided with publication of a report from law firm Herbert Smith Freehills which, based on interviews with finance executives at 70 listed corporations during February and March, was equally upbeat.
Will spending plans change post Brexit?
Its survey found that 89 per cent of respondents did not anticipate that their spending plans would change as a result of Brexit, with 87 per cent saying that the banks they use to raise capital have not suggested that Treasury products will change as a result of Brexit.“No banks have turned down business with us – this is probably because of faith that the situation will get sorted out,” one finance executive in the survey said, referring to the Brexit concerns banks have about the possible loss of the 'passporting rights' that currently enable UK institutions to operate freely throughout the EU.For related news and features, visit our Brexit section.
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