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READ MOREUK borrowers may struggle to repay debt as economy worsens, says Santander
The impending recession could leave borrowers struggling to repay their debts, the high street bank Santander UK has said as it put aside more cash to protect itself from potential defaults.
The UK arm of the Spanish bank said on Thursday that while the outlook for the British economy remained uncertain, a recession in 2023 was likely.
It said that despite government support for energy bills, rising prices would continue to eat away at disposable income, which “could impact lending repayments”.
The warning was issued alongside the bank’s full-year results, which showed the lender put aside £321m in 2022 to cover potential defaults, compared with the £233m it released a year earlier as Covid restrictions began to lift.
The higher figure was because of the “deterioration in the economic environment”, including higher interest rates, lower economic growth, and a drop in house prices, which Santander predicts will fall by about 10% to levels not seen since 2021.
“These challenges for households and businesses are expected to continue into 2023 and could impact credit quality,” the bank said, referring to the ability of borrowers to repay their loans and mortgages.
Read more at The Guardian
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