The Budget has been a good opening salvo, but more may be needed
The Budget has been a good opening salvo, but more need
Karim Haji, Head of Financial Services, KPMG UK, comments on Banking measures and industry investment will provide much needed support for UK economy.
“Bold measures are needed to deal with recent shocks to the economy spurred by Covid-19. The Bank of England’s package of measures combined with the Chancellor’s tax breaks and investment commitments are a welcome opening salvo, that shows a determination to manage threats to the economy, but much more may be needed over time.
“We cannot underplay the challenge at hand here. A huge proportion of UK businesses face significant cashflow pressures and without cash firms can’t survive for long. Thanks to a decade of scrutiny around banks’ capital resilience and rigorous annual stress tests, the finance sector is in a good position to help but it won’t be a comfortable journey. Banks’ margins are already squeezed, asset managers are especially vulnerable to the current market situation and insurers face the potential double hit of increased claims and decreased portfolios. It is also worth noting that some of the real life market shocks we’re now seeing are more severe than several of those banks have been subjected to in regulatory stress tests.
“And finally, our finance sector and coronavirus are global whereas these measures aren’t, they may have proved more impactful as part of a coordinated global response.”
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