Today’s budget shows it’s time to get the raincoats ready

Ian Larkin CEO of Target Group reacts to the UK Budget and economic uncertainty: “The Budget today shows that the Chancellor expects GDP growth to be weak. With only five months to go before the UK exits the EU we are facing an uncertain financial future, and firms of all shapes and sizes are needing to prepare for what may lie in store. While the exact nature and scale of impact are unclear, businesses are preparing for the worst while hoping for the best. Should the UK suffer economic decline we can expect to see house prices fall, unemployment rise and currency-driven inflation prompting further increases in interest rates. In this context many more borrowers would struggle to service their debts. Last week we saw RBS setting aside £100m in anticipation of increased defaults. Once loans are issued lenders have limited ability to influence the incidence of default, but their actions can have a big bearing on the scale of losses ultimately incurred. Now is the time for lenders to be preparing to handle increased levels of borrower contact and the smarter lenders will be gearing up for proactive contact. In recent years there have been big advances in the ability to use technology and data to develop pre-impairment indicators that help identify signs of potential borrower strain before a payment has been missed. As the old adage goes – “there is no such thing as bad weather, just unsuitable clothing”. Time to get those raincoats ready.”