NatWest faces £140m hit from Iran war as UK growth slows and inflation rises
NatWest said the economic fallout from the conflict in the Middle East could cost it £140m amid slowing growth and rising inflation even as it reported profits ahead of expectations,Overall, the FTSE 100 lender booked a £283m impairment charge and said that almost half of that was because of a reassessment of its economic forecast to “reflect increased geopolitical risk and weaker equity markets”,The bank said it expected its base case for UK gross domestic product growth to be only 0,4% this year, half that forecast by the International Monetary Fund earlier this month,NatWest reported a 12% year-on-year increase in operating profits to £2bn in the first three months of the year, up from £1.
8bn in the same period last year.The consensus among analysts was for an average of £1.9bn.But its shares fell as much as 4.2% in early trading on the hit from the Iran war and gloomier forecasts.
NatWest’s economic forecasts include a rise in the rate of unemployment in the UK to 5.5% this year.Last week the Office for National Statistics put the rate of unemployment at 4.9% in February but said it expected that to climb because of the conflict.The bank said the impact of the Iran war will lead to inflation hitting 3.
5% in its base case scenario,Paul Thwaite, NatWest’s chief executive, said its base case scenario did not mean that the UK economy was heading for stagflation – the double hit of rising inflation at the same time as slower economic growth,He said: “The events of the last six weeks or so have made the environment more uncertain for customers and businesses,“But we are seeing a lot of resilience,Customer activity has been good, leverage for corporations is relatively low and household savings are high.
But there is definitely a sentiment and confidence issue.The big question is how long the conflict lasts; a lot depends on the duration of the energy shock and the supply issues.”Thwaite said that the bank’s base case forecasts assumed the conflict would unwind during the course of this year.NatWest said the first quarter saw 23,000 new customers investing, compared with 50,000 across the whole of last year, while customer deposits grew by £3.1bn to £444.
8bn,The bank said gross lending rose £7,3bn in the first quarter, up 1,9% to £400bn, including £4bn to first-time buyers – with a target of £10bn this year,“Households and businesses are being more pro-active than ever in making adjustments,” he said.
“The mortgage market has been strong in the first quarter,There was a lot of acceleration of remortgage activity in March,”On Thursday, the average two-year fixed mortgage hit 5,79%, compared with 4,83% at the start of March, according to MoneyFacts.
NatWest believes this year the Bank of England will not move to increase the base interest rate, which stands at 3,75%, and that it will be maintained at this level until at least 2030,The market is factoring in at least two rate rises by the monetary policy committee by the end of this year,Earlier this week, Lloyds Banking Group, which booked a £151m charge because of the changing economic conditions, forecast GDP growth of 0,5% this year as its base case.
On Thursday the Bank of England voted to leave the rate at 3.75% but warned of increases later this year, saying “higher inflation is unavoidable” as a result of the war in the Middle East.NatWest also said that while it expects house prices to rise by an average of 0.7% this year, it forecasts a 1.8% contraction next year and a 0.
5% fall in 2028.The banking industry has benefited from the turbulence in markets because of the Middle East conflict, with NatWest saying it expected income for the year to be near the top of previous guidance of £17.2bn to £17.6bn.In February, NatWest struck a £2.
7bn deal to buy Evelyn Partners, one of the UK’s biggest wealth managers, the bank’s biggest acquisition since it was bailed out by taxpayers in 2008,The bank, which returned to full private ownership last year, already owns the private bank Coutts,On Friday, Santander said it had completed its multibillion pound cash deal to buy TSB,The Spanish bank struck a £2,65bn deal to buy the British high-street lender last year.
However, Santander said it had now paid £2,86bn based on the change in the value of assets at TSB between when the deal was struck and its completion on Thursday,Santander has said the takeover will result in at least £400m of cost savings, raising fears of job cuts and branch closures,The deal means Santander will become the UK’s third-biggest bank for current accounts and fourth for mortgages,
Zack Polanski apologises for sharing tweet criticising police at Golders Green stabbings
Zack Polanski has apologised for sharing a social media post critical of police following the Golders Green stabbings after the head of the Metropolitan police said the Green leader risked undermining public confidence in his officers.Polanski, who leads the Greens in England and Wales, said he was sorry for having shared someone else’s post “in haste”.Keir Starmer, speaking to the BBC before the apology, described Polanski’s actions as “disgraceful” and unfair on police faced with making split-second decisions.Police were filmed detaining the suspect after two Jewish people were stabbed in the north-west London suburb on Wednesday. Footage of the arrest shared on social media shows two officers appearing to kick the man on or near his head
Zack Polanski apologises for sharing criticism of police response to Golders Green attack – UK politics live
Zack Polanski, leader of the Green party, has apologised for sharing a social media post about the police officers who arrested the suspect in the Golders Green attack.‘Everyone in leadership has a responsibility for lowering the temperature at a time of such tension, and I apologise for sharing a tweet in haste,” Polanski said in a statement.He continued: “Police responses to emergency situations such as these do need later reflection in the right forums, but I accept that social media is not the appropriate channel for doing so.“I have invited Mark Rowley to meet with me to discuss the police response and the wider issues raised in his letter.”Polanski had reshared a post on X that alleged that the officers who arrested the Golders Green attack suspect “were repeatedly and violently kicking a mentally ill man in the head when he was already incapacitated by Taser
End of Trump tariffs on whisky sparks row between Scottish parties over claiming credit
Donald Trump’s announcement that he will lift punishing US tariffs on scotch whisky has been overshadowed by a row between rival Scottish party leaders over claiming credit for the decision.The whisky industry and business leaders were delighted by the US president’s announcement on his Truth Social network on Thursday that he would end the tariffs to mark the visit by King Charles and Queen Camilla.“The King and Queen got me to do something nobody else was able to do, without hardly even asking!” Trump said.The Scotch Whisky Association (SWA) estimates the 10% tariff imposed by Trump last year has cost producers about £150m in lost sales and led to hundreds of job losses. Shares in Diageo, the drinks multinational that produces Johnnie Walker, rose sharply on the news
Watchdog weighs investigation into Farage’s undisclosed £5m gift
The UK elections watchdog is considering whether to investigate an undisclosed £5m gift received by Nigel Farage before he announced his candidacy at the last general election.The Guardian revealed this week that the crypto billionaire Christopher Harborne gave the Reform UK leader the money.In a written response to the Conservative party, the Electoral Commission said it was “aware of this matter and are considering it under our regulatory remit. We will consider all the available relevant information and recommend what, if any, next steps the commission will take.”Farage had previously stated he did not intend to stand as an MP but reversed his position in June 2024, within weeks of receiving the personal gift from the Thailand-based businessman
Where does Starmer’s leadership stand – and who are his potential challengers?
As the May elections creep closer, the leadership speculation at Westminster grows more intense. Is Keir Starmer safe and, if so, for how long?When will Angela Rayner’s tax affairs be resolved, and will she return to the cabinet? Who has Andy Burnham done a deal with to get back to Westminster, and would MPs support him if he did? Why has Wes Streeting gone so quiet?To the frustration of many – not least the prime minister himself – discussions about who is up and who is down have long been a staple of Westminster life. But as the security of Starmer’s position has ebbed and flowed in recent months, it has intensified. So where do Starmer – and his putative rivals for No 10 – stand?Despite feverish leadership speculation, and Starmer’s rock-bottom public approval ratings, the most likely scenario remains that he stumbles on. The quiet, loyal majority of the parliamentary Labour party may feel deeply despondent about their predicament, but many feel that ousting him remains the nuclear option
Starmer restores powers to ousted hereditary peers in Lords shake-up
Dozens of hereditary peers whose seats have been abolished have had their lawmaking powers restored as Keir Starmer seeks to accelerate changes to the House of Lords.It is understood that 15 Conservative hereditary peers, two Labour and nine crossbenchers have been handed life peerages, enabling their return to the red benches.The apparent concession was made in a bid to end a long battle over Starmer’s plans to remove the right of the last remaining hereditary peers to sit in the Lords, a commitment made in Labour’s 2024 manifesto.A government source described the parliamentary session that has just ended as “tortuous” given that every stage of the bill to abolish hereditary peers has resulted in considerable disruption in the Lords, as well as demands in private meetings for compensation for removed peers.The peers have already been subject to a due diligence process run by the House of Lords appointment commission, which includes a check by HM Revenue and Customs
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