By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants. This column appears in the Pembrokeshire Herald, the Carmarthenshire Herald and the Llanelli Herald.
British banks approved fewer mortgages last month, despite a boost from existing home-owners looking to lock in cheaper interest rates ahead of the Bank of England’s rate rise in August.
That’s the verdict from the latest mortgage industry data.
“The broader economic outlook remains mixed, with households continuing to see their incomes being squeezed by rising inflation,” UK Finance director Peter Tyler said.
“July saw steady growth in gross mortgage lending, driven largely by remortgaging as homeowners locked into attractive deals in anticipation of the recent base rate rise.
Annual consumer credit growth slowed to 3.7 percent, its weakest since December 2014.
The narrower measure of credit card purchases was more robust, which UK Finance linked to the World Cup and unusually warm weather boosting spending.
Meanwhile, there’s been a warning from the British Government of the consequences of a ‘no-deal’ Brexit.
Britons living in the European Union could lose access to their UK bank account services and businesses on the continent could be cut off from investment banks in London if a Brexit deal cannot be agreed.
In a document detailing contingency planning if Britain leaves the EU in March with no transition deal, the government said unilateral action on several fronts could only minimise disruption up to a point.
While Britons will still be able to use their bank cards to withdraw money in EU countries, more than a million UK citizens living abroad may not be able to use their British accounts for borrowing and deposit services, or insurance contracts such as annuities that pay pensions, the document said.
Banks offering these services may also be affected.
“This could impact these firms’ ability to continue to service their existing products,” it added.
All Britons will face higher costs to make card payments in the EU when travelling or shopping online.
The EU agreed this year to cap the fees retailers pay to process debit and credit card transactions.
Without a deal between London and Brussels, British customers will no longer be covered by a ban on cross-border surcharges, which prevents business from imposing excessive charges on consumers.
The Government had previously said those charges cost Britons about £166 million in 2015.
“Leaving the EU without a deal would cause major inconvenience to millions of pensioners, travellers and drivers,” said Hugh Savill, director of regulation at the Association of British Insurers.
Currently banks, insurers and fund managers in Britain have unfettered access to the EU, their biggest export market, worth £26 billion last year, under the bloc’s “passporting” rules.
Without a deal, banks, insurers and pension providers would have to establish operations in the EU or be legally barred from serving clients or sending out payments.
Brexit minister Dominic Raab played down the threat that tens of thousands of British retirees in the EU – many of whom live on the Spanish Mediterranean coast – could lose access to their pensions.
“It’s hardly in the interests of southern Spain to do harm to the UK pensioners out there,” Raab told reporters.
The Government said it was committed to giving regulators such as the Bank of England and the Financial Conduct Authority a “general transitional tool” to phase in changes easing the impact if no deal is agreed.
However, the EU would also need to take action to avoid disruption in cross-border financial services, it said.
Brussels has said it is primarily up to banks and insurers themselves to prepare for Brexit, such as by opening new hubs in the bloc.
The Government document said the EU needed to reciprocate British action to ensure continuity in cross-border insurance policies, derivatives contracts, and core market services for companies and people.
Without EU action, it said, businesses across the bloc could no longer use investment banks in Britain.
Brussels, for example, would need to give investors in the EU permission to continue using a share trading platform or clearing house in London, where most euro-denominated derivatives are currently cleared.
The finance ministry and the Bank of England will give details next month on how customers in Britain can continue using a settlement house in the EU, a critical step whereby cash is exchanged for legal ownership of a stock or bond.
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