British begin to store cash based on economic uncertainties

Economy Adina Camarasu
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British’ personal deposits increased by 32,4 billion pounds in the first 11 months of this year compared with an increase of 19,8 billion pounds recorded in the same period last year, which is a sign that the British are preparing to face economic uncertainties, according to the data published on Wednesday by the British Bankers Association (BBA), informs Bloomberg.

Both investors and British depositors were shaken by the outcome of the referendum in June on leaving the EU, which prompted the Bank of England to reduce the base rate to a historical minimum of 0.25%.

Even if the British economy resisted quite well so far, most economists expect a slowdown in 2017 as companies will try to get a clearer picture of the future relationship of Britain to the community.

‘I saw how the personal deposits have grown stronger in last months as consumers have decided to store cash in the absence of liquid investment opportunities. The increasing of the deposits could also suggest that the population wants to increase its cash reserves in the context of a future possible economic uncertainty’, stated the BBA chief economist, Rebecca Harding.

A separate report of Halifax bank suggests that house prices in Britain could record only a modest growth in 2017, in the context of the slowdown economy and inflation. The bank also expects the demand for houses to fall in 2017.

‘The economic slowdown in 2017 is likely to increase the pressure on occupancy risk of rising unemployment. The deterioration of the labor market, with an expected reduction in purchasing power households, may lead to a reduced demand for houses’, said Martin Ellis, economist at Halifax.

Britain has revised down its growth forecast for the next two years, as announced last month the British Finance Minister, Philip Hammond, during the presentation of the first draft budget after the vote in favor of leaving the EU.