RBS boss Ross McEwan warns no-deal Brexit could push UK into recession

Mr McEwan said bank was reluctant to lend to retail and construction sectors, which are struggling at the moment

RBS chief executive Ross McEwan has warned that a no-deal Brexit could push the UK into recession.

According to the lender’s boss, a “bad Brexit” could lead to zero or negative economic growth, which Mr McEwan said would have an impact on RBS’s share price.

“We are assuming 1-1.5 per cent growth for next year but if we get a bad Brexit then that could be zero or negative and that would affect our profitability and our share price,” he said.

Mr McEwan also told the BBC that the bank was being more cautious about lending to certain sectors in the run up to Brexit, specifically retail and construction.

“There are some retailers we are having to be a bit more cautious about because they haven’t made the necessary transition from bricks and mortar to digital,” he said.

“The big construction companies are getting very cautious about where they are putting their capital – particularly around London.”

Earlier this week, data revealed that growth in the construction sector dropped to its weakest pace in six months in September.

The RBS chief said the bank’s lending to large businesses was down by approximately 2 per cent overall, because firms are postponing investment decisions.

“Big businesses are pausing, they are saying that in six months time I’ll have another look at the UK and I might come back, but if it’s really bad I’ll invest elsewhere – that’s the reality of where we are today,” Mr McEwan said.

Last month, chancellor Philip Hammond said a no-deal Brexit threatens to set Britain back 10 years, and said reaching a deal with the EU was necessary to “lock in the economic progress that we have made” repairing the economy since the financial crisis.

“As we leave the EU we must secure a close and enduring partnership with our European neighbours and we must heed the clear warnings of the IMF and others of the significant costs not reaching a deal with the EU will have for British jobs and British prosperity,” he said.

“Despite the contingency actions we are taking, leaving without a deal would put at risk the substantial progress the British people have made over the last 10 years.”