One of Britain’s top bank bosses has warned that a bad Brexit could tip the country’s economy back into recession.
Ross McEwan, chief executive of Royal Bank Of Scotland (RBS) claims a bad Brexit could result in ‘zero or negative’ economic growth which would be damaging to his bank.
Zero or negative
He said: “If we get a very hard Brexit scenario the economy may well go down to zero or negative growth next year.
“We are seeing the very large corporates just pausing their investment into the UK. They are sitting and saying ‘let’s wait for another six months and see what the outcome is and in six months time we can either come back and invest or if things are really bad we will stay away from investing here’. That’s the reality of what’s happening today.
He said there is no current effect on small businesses in the UK who are borrowing and trying to grow their businesses because they are very local, but it’s the big businesses that are just paused because they’re thinking ‘Do I invest here? Do I invest in Europe or do I invest somewhere else.’”
He continued by saying RBS has already started to be more careful about lending to certain sectors of the economy like retail and construction.
Of particular concern appeared to be retail outlets with little or no online presence. Said Mr McEwan: “There are some retailers we are having to be a bit more cautious about because they haven’t made the necessary transition from bricks and mortar to digital. We are looking at ‘have they made that transition’.”
On construction, he said: “The big construction companies are getting very cautious about where they are putting their capital – particularly around London.”
BBC Business Editor Simon Jack commented: “The news that RBS is withdrawing credit will heap further woes on the retail sector which has already seen nearly 2000 stores close so far this year.”
“We should care what Ross McEwan says for two reasons.
First, as a bank that does almost all its lending in the UK, its fortunes are dependent on those of the economy as a whole. Second, taxpayers still own two-thirds of this bank.”