Britain still at risk of ‘mild recession’ despite better than feared start to year, Lloyds Bank chief predicts
Britain could still suffer “a mild recession” despite the economy performing much better than experts warned at the turn of the year, the head of Lloyds Bank, the country’s largest mortgage lender, has said.
Charlie Nunn, chief executive of Lloyds Bank, told The Sunday Times that there is a “more positive outlook” about the UK economy compared to just a few months ago.
Families and businesses have held up a lot better under the strain of red hot inflation, higher interest rates and tax hikes than economists had feared a few months back.
The Bank of England and Office for Budget Responsibility have both canned their recession forecast for 2023, although Nunn said there is a risk one could still prop up.
“It’ll still be a mild recession, or a pretty slow/negative growth environment,” Nunn, 51, said.
Most analysts have had to revise up their forecasts for the UK economy this year, mainly because consumers are still splashing the cash despite being gripped by the worst inflation crunch in 40 years. Prices have risen 10.4 per cent over the last year.
Numbers out last week from the Office for National Statistics revealed UK gross domestic product – which measures the value of all goods and services made in an economy – flatlined in February, missing the City’s projection of a slim 0.1 per cent expansion.
Nunn’s recession bet runs against the International Monetary Fund’s. The lender of last resort reckons Britain’s economy will shrink 0.3 per cent this year, putting the country on the brink of a recession – defined as two consecutive quarters of contraction – for most of the year.
The head of Lloyds Bank also revealed in The Sunday Times interview that banking bigwigs were roped into emergency talks to hatch a plan to contain any fallout from the collapse of US tech lender Silicon Valley Bank last month.
A group of top lenders “agreed we would open accounts” for people who could not tap their cash tied up in SVB UK, helped by a government backstop covering losses from the scheme, Nunn said.
SVB UK was eventually purchased by Britain’s biggest bank HSBC for £1.
Lloyds Bank was pushed into absorbing HBOS in the 2008 financial crisis. The firm also received a £20bn taxpayer-funded bailout.