Can we now breathe a sigh of relief about the UK banking sector?
This week saw results from the major UK banking giants which were well ahead of analyst's expectations and seemed, on the surface at least, to indicate a significant improvement in the UK financial arena. However, can we now breathe a sigh of relief about the UK banking sector?
While there's no doubt that UK banking operations have improved dramatically from lows seen over the last two years there are many more challenges ahead. It is easy to forget that the figures announced this week related to the first six months of 2010 when a wave of relief created a temporary improvement in the UK economy and the UK financial arena. The situation at the moment is very different with forecasts for economic growth in 2011 reduced from 3.5% to 2.4% in a recent survey of experts in this arena.
At a time when many are demanding that UK banks increase liquidity in the investment and consumer arenas this is unlikely to happen if the economic outlook worsens. It may well be a time for UK banks to "baton down the hatches" ahead of very choppy waters. Who knows what lays ahead?
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