NatWest boss: Budget fears have hit confidence

Warning: NatWest boss Paul Thwaite

NatWest’s boss yesterday warned that businesses’ optimism has dipped since the summer as firms worry about the Budget.

Paul Thwaite said uncertainty over Rachel Reeves’s plans, together with the US election and wider global tensions, was weighing on sentiment.

The state-backed lender’s chief executive said the economy has performed better than expected since the start of the year. But there were signs of jitters among firms as well as hesitation in some consumer behaviour, as households delay larger purchases.

The warning came as NatWest, which remains nearly 16 per cent owned by the taxpayer after its bailout during the financial crisis – although plans by the Tory government for a retail share sale have been abandoned by Labour – reported a better than expected £1.7billion third quarter profit.

Shares climbed to their highest level since 2011 in early trading before giving up most of the gains to close up 0.6 per cent, or 2.1p, at 363.9p. Thwaite said confidence among businesses and consumers was up compared with last year. That was reflected in higher mortgage applications and loan demand from firms.

However, ‘not all customers are feeling the same’, Thwaite said, adding: ‘Whilst discretionary debit card spending on smaller items like clothing has risen, we are seeing larger purchases being delayed, with consumers saving at a higher rate than they were pre-pandemic.’

Businesses were feeling ‘largely positive’ but this varied across different parts of the economy, Thwaite said.

‘Some businesses are waiting for greater clarity around things like the Budget, interest rate decisions and the outcome of the US elections,’ he said. Thwaite declined to be drawn on speculation about what Reeves might announce next week.

But he added: ‘What I’d like to see is a Budget that supports the unlocking of growth and investment across all the nations, all the regions of the UK.

‘That’s obviously what the business community would like to see.

‘The economy has performed better over the course of the last ten or 12 months than many predicted.’

Markets cheered the results as NatWest stemmed a previous trend seen of savers pulling out funds in search of higher-interest products.

Customer deposits grew £2.2billion in the third quarter to £427.4billion. Loans grew by £8.6billion, the bank said.

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