UK economy must endure ‘short, sharp shock’ after Brexit vote

Forecast group EY Item Club says business investment and consumer spending will be held back because of uncertainty

The UK economy will have to weather a short, sharp shock, with Brexit uncertainty holding back both business investment and consumer spending, according to a leading economic forecasting group.

As forecasters cut growth expectations, a survey of finance chiefs showed caution increasing since the referendum, and retailers reported fewer shoppers on the high street than a year ago.

Related: Brexit impact is going to be horrible, says leading City fund manager

Related: Bank of England holds UK interest rates: what the economists say

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Ross McEwan on Brexit: it’s not a banking crisis – RBS has plenty of money

Chief executive of bailed-out bank is optimistic after referendum result – but, despite an overhaul, profits remain elusive

A little after 4.30am Ross McEwan picked up the phone to speak to his colleagues at Royal Bank of Scotland. The chief executive of the bailed-out bank had just learned that the UK had voted for Brexit. Up early to catch a flight to Edinburgh, McEwan wanted to ensure the contingency plans that had been drawn up several months earlier were being rolled out.

Staff had been up early to deal with customer orders – the dealing room handled five times the usual amount of volume of foreign exchange – and the bank was watching for any signs of panic in the financial sector. While the share price did sink to levels reminiscent of the 2008 crisis, when the bank ran out of cash and survived only because of a £45bn taxpayer bailout, McEwan said the immediate impact in the first few days after the Brexit vote was different. “We had deposits coming to us because people realised we were a strong bank,” he said.

Related: BlackRock chief warns Brexit will lead to ‘short-term’ recession in UK

Related: Bank of England keeps cool head amid rate hysteria

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