Nationwide downbeat on economy as higher inflation 'noticeably' slows consumer spending

Simon English
Almost three-quarters surveyed by Nationwide expressed concern about rising cost of goods and services: Paul Faith / PA Wire

NATIONWIDE Building Society issued a downbeat note on the economy today, noting that its customers are increasingly concerned about inflation.

Chief executive Joe Garner said while the economy will grow “modestly”, consumer spending “has slowed noticeably”.

“Almost three quarters of those surveyed in our Brexit Consumer Panel expressed concern about the rising cost of goods and services,” he added.

While Nationwide’s own figures are strong, its concern about the wider economy might cause nerves at the Bank of England. Nationwide made a profit of £886 million in the third quarter to December, down from £946 million last time, but it expects a strong finish to the year.

Mortgage lending fell from £26 billion to £24 billion, causing its market share to slip from 14% to 12% in the face of strong competition. It says more people are switching into its current accounts from the main high street banks than anywhere else.

Nationwide’s chief economist Robert Gardner predicts there will only be one interest rate rise this year, which most mortgage borrowers will be able to cope with.

Nationwide predicts 2018 economic growth of between 1% and 1.5%. Bad debts for the quarter were £79 million, down from £111 million.

Nationwide had a contract with Carillion to provide security and reception staff and said it immediately hired those 300 people following its collapse.

It is not exposed to losses from loans to Carillion.

Nationwide, since it doesn’t have shareholders to pacify, says it won’t take market share. “We expect competition in the mortgage market to continue and we will prioritise quality over volumes in the long-term interests of our members,” said Garner.

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