The RBS chief also said that many large companies have “paused” their investment in the UK until Brexit negotiations have been completed, while smaller firms have not changed their plans.
Speaking on the prospects for the UK economy, McEwan stated in the interview:
“If we look at what we expect on a normal run rate, and we’ve got economic consensus, which next year says about 1 to 1.5% growth in the economy, if we get an OK Brexit scenario. But if we get a very hard Brexit scenario, we have other factors that we put across that say that it will actually be less than that, and the economy may well go down to zero or negative growth next year, if that Brexit relationship is very, very harsh.”
McEwan was asked “what is the cost of a ‘no deal’ to RBS?” and replied:
“Well, it will reflect across into our profitability and therefore into our share price….
“If we don’t get the growth, that reflects into our business and the growth of that business, which may be zero or negative.”
McEwan also commented on the current economic climate, saying executives were putting off investment decisions due to the uncertainty surrounding the EU-UK talks:
“We’re seeing the very large corporates just pausing in their investment into the UK. Because they’re […] saying, ‘do we wait’ for another six months to see what the outcome is, and that’s what they’re doing. And they can say, in six months’ time we can either come back and invest, or if things are really bad, we will stay away from investing here. That’s a reality of what’s happening today.
“Small businesses today, no impact on them whatsoever. They’re continuing on, they’re borrowing, they’re trying to grow their businesses, because they are very local businesses.
“But it’s the larger business that’s just paused. Because [they are asking themselves] do I invest here, do I invest in Europe, or do I invest somewhere else? That’s the decision making process they’re going through.”