Payne's Blog

Nigel Payne is the managing director of Assurant Intermediary which specialises in delivering a range of general insurance products to the broker and intermediary market.

With over 20 years experience of the mortgage industry including senior roles at BM Solutions and TMB, Nigel is a well-known figure within the industry. A regular contributor to the financial trade press, he is also the general insurance and protection guru on the Marketing Innovation Forum

Out of the woods? Not until 2012

14 June 2010

So when is UK Plc going to be out of the woods? Not until 2012 is the best guess at the moment.

There are two big issues on the horizon to think about. Firstly the new coalition government has made it very clear that the next few years are going to be very tough with some deep spending cuts required.

That will inevitably involve less investment and more job losses. The second is the still fragile state of the banks, particularly Royal Bank of Scotland and the Lloyds Banking Group.

The second issue lies partly at the government's door. The Special Liquidity Scheme (SLS) that it provided to help fund the banks to the tune of over £200 billion (most of which went to RBS and LBG) is due to be repaid in 2012 Unless the government give them more time, the banks are facing a huge problem in repaying all that money.

Since it is unlikely that there will be much movement in interest rates during that period, the banks will continue to find it difficult to attract savings. They are really stuck between a rock and hard place.

So, with deep spending cuts and reduced investment by the government, lack of lending by the banks and an overhang of a poor economy, things aren't likely to get any better in the short term. And in lending criteria we may even see some further retrenchment.

However once the SLS issue is sorted out, we should see a 'bounce' in the mortgage market. All the government spending cuts will have hit us, and we can start looking forward to a more positive outlook.

Just keep your head above water until 2012 and we will all be swimming again, albeit with some arm bands to hand!

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Payne's Blogs

No PPI from Lloyds - so what?
17 August 2010

A Client Bank or a Contact List
26 July 2010

Over communication? I think not
20 July 2010

Out of the woods? Not until 2012
14 June 2010

Hung up on Compromise?
20 May 2010

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