EU referendum uncertainty ‘biggest threat to UK economy’, says top lender

Peter Hill
Peter Hill
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UNCERTAINTY AROUND Britain’s future membership of the European Union against a backdrop of global instability is the biggest threat facing Britain’s prosperity, according to a leading figure in the UK financial services industry.

Leeds Building Society chief executive Peter Hill, who is also chairman of the Council of Mortgage Lenders, also said voters should focus on the long-term view rather than “short-term soundbites”.

He told The Yorkshire Post: “For example, you have got (the employment minister) Priti Patel quoted as saying that coming out of Europe will reduce the cost of car insurance for women.

“I would say the right way to look at this is on a multi-generational basis and not think about short term and relatively frivolous matters but think in terms of big picture, long term and make a decision on that basis.”

Mr Hill added: “Uncertainty is always the biggest concern. Of course, in the first half of 2015 we were preparing for a general election where the outcome was very difficult to call and here we are in the first half of 2016 preparing for a referendum where the outcome is very difficult to call.

“So that uncertainty with the backdrop of global instability is probably the biggest risk to the UK economy.”

He said that the coming months would see much information, insight and analysis on the consequences of staying in or getting out of the EU and it would be up to members to make up their own minds.

Mr Hill added: “Personally I think there is sufficient momentum in the domestic economy to keep things moving in the right direction.”

He made the comments as Leeds Building Society reported record profits of £108m for 2015 and announced plans to create 150 new jobs.

The mutually-owned lender increased new residential mortgage lending by 15 per cent to £3.1bn.

Savings balances grew by £751m to £9.9bn, the highest level in its history. Mr Hill said: “We have had another strong year.”

He added that economic fundamentals such as employment and earnings growth are good but cautioned that house price inflation is making it more difficult for people to get onto the property ladder.

Last year the UK mortgage market saw strong competition from the activities of challenger banks like Virgin Money and TSB, said Mr Hill.

He added: “You have to have the price right and proposition right to be successful.”

Leeds Building Society has invested in speeding up services and has shifted its data storage from its own servers to a cloud-based system run by HP Enterprises.

Mr Hill welcomed the appointment of Bank of England veteran Andrew Bailey as the new chief executive of the Financial Conduct Authority.

He said: “I think he will be balanced and proportionate. I think a lot of hard work has been done around regulation...

“I think Andrew is quite a pragmatic person and will want to engage with the industry in a dialogue. I don’t think he is a person who is either inclined to or needs to use megaphone diplomacy.”

Skipton chief to keep ‘watching brief’ on EU referendum

The head of Skipton Building Society Group has vowed to keep “a watching brief” on the EU referendum in the lead up to the historic poll.

Chief executive David Cutter told The Yorkshire Post: “It is likely to introduce an element of uncertainty. But in terms of our own business we are almost entirely UK based so I don’t think it will have much of an impact.

“But it is a big decision and markets never like uncertainty.”

Sterling sank to a seven-year low yesterday as companies and investors rushed to insure themselves against the chances of a British exit from the European Union that HSBC said could knock off a fifth of the value of pound.

The aftermath of Prime Minister David Cameron’s announcement of a June 23 referendum on “Brexit” has driven the worst three days for the world’s fourth most traded currency since the depths of the financial crisis in 2008-09.

Skipton Building Society’s latest annual results show it has continued its strong recovery from the crisis.

The mutually-owned lender said profits rose 2 per cent to £150m.

Gross mortgage lending increased by 23 per cent to £3.7bn.

Mr Cutter said he was pleased with strong, balanced growth in both mortgages and savings.

The group’s estate agency division Connells sold 50,526 homes last year with prices rising by an average of eight per cent on the previous year.

Connells expects prices to rise by a similar level this year.

Mr Cutter said it was “same story” in the housing market with not enough homes being built and strong buyer demand.

Skipton is chaired by Mike Ellis, a former finance director at HBOS.