Lockdown must not be an excuse for axeing banks

LOCKDOWN’S damaging impact on the UK economy has yet to be confirmed in hard numbers, but if you believe the experts, we’re heading for a deep, short recession.

Economic activity in the three months to the end of June is expected to fall 35 per cent with nearly a third of the workforce furloughed. With large (British Airways) and small businesses now beginning to lay off staff, unemployment is on the rise. Not a pretty picture for sure. It’s not all doom and gloom as our report opposite confirms – this country’s entrepreneurial spirit remains as splendidly vibrant as ever.

Furthermore, much to the relief of this country’s army of private investors, the stock market has bounced back strongly from its horrendous fall in late February and March – although Shell’s decision last week to take a haircut to its dividend sent share prices spiralling downwards again.

With loads of ‘bad’ corporate and economic news in the offing, I would not be surprised if there are more sharp falls. Investors should remain cautious and focused on the long term – investing regularly and patiently via an Isa or a pension rather than dipping in and out of shares in the hope of capturing profits.

Certainly, the focus of the UK economy will shift irrevocably as a result of lockdown. The high street will shrink as more business is done online and whatever you may think about their unwillingness to pay their fair share of UK taxes, the likes of Amazon aren’t going away.

They will become more dominant than ever before (just writing those last eight words causes me to break out in a rash of goose bumps).

The trend towards greater online banking and less reliance on hard cash is also irrevocable. Indeed, lockdown has helped the banks in pursuing these dual goals. According to cash machine network Link, cash withdrawals from ATMs are 60 per cent down as a result of lockdown.

More worryingly, research that Link has just completed indicates that some 44 per cent of consumers believe they will increasingly use digital and contactless payments in the months ahead in preference to cash.

It also seems inevitable that more bank branches will be axed once the country comes out of lockdown. Although a majority of bank branches have remained open for business during lockdown, some have been temporarily shut while others have had their opening hours and days severely clipped.

Derek French, a longstanding campaigner for shared bank branches in every town up and down the country – outlets owned and run by all the mainstream banks – has been keeping a close eye on what the banks have been up to in recent weeks. Everything he has seen or discovered through diligent research suggests that more branch closures are just around the corner.

French, a former NatWest branch manager, says t hat Lloyds has ‘temporarily’ shut some 90 branches, a number in towns where they were the last bank of call. Barclays has followed suit, temporarily shutting some branches and severely restricting the opening days and hours of others.

By way of example, near where he lives in Hertfordshire, French says Barclays has shut for the time being its Leagrave and Bury Park (Luton) branches while curtailing the opening hours of its Harpenden branch more aggressively than rival banks in the town.

Interestingly, he says that of the four big banks – the other two being NatWest and HSBC – Barclays and Lloyds are the most over-branched. They have 950 and 850 high street outlets respectively, compared to the 600 that the other two each have.

FRENCH’S reasonable conclusion from all this analysis is that Barclays and Lloyds are more likely than not to apply another haircut to their branch networks sooner rather than later. Lockdown, he says, will have given them the perfect excuse to do so.

Although the Government is keen to ensure that all communities have access to cash – whether it’s through free-to-use cash machines, bank branches, the Post Office or cash back facilities – it won’t stop the banks continuing to take an axe to their branches.

But their pruning makes the case for shared branches stronger than ever.