Barclays poised to lend £30bn in display of confidence in Britain

BARCLAYS has promised to lend at least £30bn to British families and businesses over the next three years in a vote of confidence in the economy.

The bank is ditching self-imposed Brexit and Covid-era lending restrictions to plough more money into UK credit card lending, unsecured loans, mortgages and business loans.

Chief executive CS Venkatakrishnan said: “We are very, very bullish on the UK as a place to do business.”

More good news came as Andrew Bailey raised hopes that Britain’s “very small recession” may already be over amid “distinct signs of an upturn”. The Governor of the Bank of England said the current downturn was likely to be one of the shortest and shallowest in peacetime as he highlighted the resilience of the economy.

He also signalled that policymakers would start cutting rates before inflation falls to its 2pc target, as there were “encouraging signs” that even the most stubborn price pressures were easing.

Data published by the Office for National Statistics (ONS) last week revealed the economy shrank by 0.3pc in the final quarter of 2023, following a decline of 0.1pc in the third quarter.

However, Mr Bailey told the Treasury select committee: “If you look at recessions going back to the 1970s, this is the weakest by a long way.”

The jobs market remained resilient, he said, with most people who want to work in a job. He added: “The economy appears to be at full employment. That is a very good story.

“I would just say, against a lot of talk about what we think is going to be a very small recession, we think the economy is already actually showing distinct signs of an upturn.”

Mr Venkatakrishnan said: “We are very optimistic about the UK.

“The real strategy here is to grow the bank outside of the investment bank, focused especially on the UK. We’re coming out of Covid and the Brexit situation is sort of normalised, the UK has shown itself to be resilient. It’s a great consumer economy.”

Barclays’ upbeat outlook was backed by a fresh survey showing bosses are more optimistic about economic prospects than they were a year ago, with 50pc of senior leaders saying consumer confidence will be better by the end of the year, according to a poll by Boston Consulting Group, up from 38pc last year.

However, optimism is not universal. Economist Benjamin Nabarro, at Citi, yesterday predicted Britain will face a worse recession next year. He predicted “a hard economic landing”, with GDP shrinking by 0.2pc in 2025.

The UK will be the only major economy to contract in 2025, Citi predicted.

Barclays’ focus on lending to Britain’s real economy forms part of a major strategy overhaul. The lender will focus less on its US investment bank as it seeks to shrink the division’s outsized influence. About £30bn had been earmarked to bolster Barclays’ presence in high loan-to-value mortgages and credit card lending through Barclaycard UK, as well as boosting business loans. Tesco Bank and Kensington Mortgages, both recently acquired by Barclays, will spearhead the push.

The strategy overhaul is Barclays’ first since 2014 when former chief Antony Jenkins tried to trim back the investment bank.

In a four-hour presentation to investors, Mr Venkatakrishnan unveiled plans to hand £10bn to shareholders and restructure Barclays from three units into five. Shares, which have fallen by almost a third since his appointment in November 2021, rose by 5pc as investors endorsed the new strategy.