Gradually over the last few weeks, there has been a gradual return to school and with Labour day in N. America this weekend, the summer will be ‘officially’ over….. this really is another milestone in the return to ‘normal rules’ and it has started to flow through the newscycle this week too.

The Economy

In the UK the furlough scheme is now starting to wind down, and gradually starting to flow through to employment levels with an acceleration of job losses in August. It is not doom and gloom in all some sectors mind you, notably this week Amazon annouced the hiring of 7,000 new roles.

The motor industry and housing market have also seen a strong bounceback, with car sales strong somewhat on the back of a perceived need to avoid public transport to get to work. Similarily housing has seemingly lots of demand build up during the lockdown period (and no doubt helped by the stamp duty tax cut too).

Industries such as retail and food/accommodation however have been hit hard and with each industry having different levels and speed of return it really does feel like a complete resizing and reshaping of the economy is upon us.

A lending bounce back?

Some of this has translated through to a bounce-back in lending, with consumer borrowing returning to pre-COVID levels; Mortgage demand and credit card spending increased…

… and although the demand is higher from consumers, the other side of this equation is of course the lender and this is where it becomes more complicated.

Lenders are now starting to become more cautious, conscious of what may lay ahead. We are starting to see credit card limits being reduced and restrictions on mortgages increasing.

• HSBC curbs sales of low deposit mortgages
• Limits on borrowing from family members for deposits (at a time when this is increasing in need too)
• Curbs on mortgage lending to furloughed applicants

It is becoming a tale of two halves

• If your industry was impacted, you were on furlough, not in a role or struggling; economically things are tough, money is being saved and people are concerned. How will bills be paid and where will the next paycheck come from.
• If your industry has been minimally impacted, and you were in a job, (such as in financial services or public sector – not that it has not been busy mind you), economically some folks are actually better off.

How we navigate all this will become apparent in the next 4-6 weeks, but this is shaping up to be an uneven recovery and credit crunch for some.

Lastly, The Return of the office – part 2. The bun fight over the return to the office still continued this week, with business on one side saying it is not practical (and employees voting with their feet) and the government on the other saying you should go back. In what appeared to be any attempt the referee, the Bank of England stepped into the argument… the debate continues, and I don’t see us back in offices, en mass anytime soon.

That was the week that was…. have a good weekend everyone…. @chris_w_tweet

A quieter week this week news-wise, with the main highlight being revised guidelines on payment holiday continuation for customers with mortgages. Those in need can continue to get relief, but at this point, it will start to be reflected on a consumer’s credit file… and with the court and enforcement process starting up again too gradually it feels as if we are returning to what feels a little more normal.

However, with so many changes coming together at the same time, a crunch is coming… and I suspect one that will be significant for some. A look at what is ahead….

• The end of extended payment holiday support
• Winding down of furlough
• An economic downturn and business closures
• Business restructuring (I mentioned STA last week, Pret A Manger this week)

… and although arrears levels are currently fine, it is likely they will spike once this flow through. (we have as an example the US where they are now starting to spike – again sectorally driven). It is going to be a ‘interesting’ time, and challenging for many.

Elsewhere there is still plenty of discussion around returning to the office. Many businesses are saying no, yet the government is saying yes… but what about the employees, well 9 out of 10 of us like having some time WFH at least…. most people I know have actually found it more productive too…. hopefully we will reach some sort of new balance.

Have a good weekend everyone… @chris_w_tweet