"Mainstream scale banks and building societies cannot be expected to plan bullishly for a future that remains a black hole of political and economic uncertainty."
In a critical analysis of the withdrawal process, the AMI warned that "mainstream scale banks and building societies cannot be expected to plan bullishly for a future that remains a black hole of political and economic uncertainty".
The AMI believes that as a result, lenders are "planning bearishly, constraining lending, focusing on vanilla customers who arguably need the least help and curtailing investment".
The Association added: "This cannot be allowed to continue. Legislation takes six months to progress through Westminster. Summer recess is due in just weeks. If we are not to come crashing out of the EU with no deal agreed, we must see the plan now."
Its bulletin says business leaders remain frustrated at the apparent lack of progress and detail available from Westminster in relation to Brexit. The British Chamber of Commerce said that with less than nine months before the UK leaves the EU, the country is only ‘a little closer to the answers businesses need’ than the day after the referendum.
Additionally, the AMI notes that markets are unconvinced of an August rate rise, with odds for an August hike around 40%, rising to a 60% chance by the end of the year.
The latest Inflation Report from the Bank of England marks in three rises by 2021, but this is based on there being no negative impact of a bad or no-deal scenario on the UK’s exit from the European Union.
Mortgage approvals for house purchase are also down while overall activity in the mortgage market remains subdued. The latest figures from UK Finance showed 25,100 new homemover mortgages completed in April, some 4.2% fewer than in the same month a year earlier. The £5.4 billion of new lending in the month was 3.6% down year-on-year.
While first-time buyer and remortgage market activity have supported overall gross lending figures, the Bank of England noted the cheap credit environment could be providing a bigger boost to mortgage lending figures.
The AMI concluded: "Whatever the outcome of the Government’s deal with Europe, the damage being done by uncertainty is already hurting the UK economy significantly. This is not only visible on the high street where thousands of workers are losing their jobs, it is showing in lending figures too."
