EY ITEM Club. Outlook for financial services. Winter ey.com/fsitemclub

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1 EY ITEM Club Outlook for financial services Winter ey.com/fsitemclub

2 About this report The EY ITEM Club: Outlook for financial services examines the implications of the EY ITEM Club s economic projections for the financial services sector. EY is the sole sponsor of the EY ITEM Club, which is the only non-governmental economic forecasting group to use the HM Treasury model of the UK economy. Its forecasts are independent of any political, economic or business bias. In conjunction with ITEM s Chief Economist Peter Spencer, Oxford Economics is responsible for producing the forecasts and analysis provided in ITEM s forecast reports. Oxford Economics is one of the world s foremost independent providers of global economic research and consulting using unique global economic models.

3 Contents 04 Macroeconomic outlook Thanks to strong consumer spending, the UK economy performed better than expected with GDP forecast to grow by 1.3% this year, against the previous figure of 0.4%. 06 Introduction Omar Ali, Managing Partner, Financial Services, EY UK, gives his view on the winter forecast and what it means for the financial services industry. 08 Forecast highlights A brighter but still challenging overview for the UK economy. Viewpoints 10 Banking & Capital Markets Robert Cubbage, Banking & Capital Markets Leader, analyses how a better prepared banking sector will handle the issues of Brexit, a slowing economy and regulatory change. 12 Insurance After a difficult 2016, Rodney Bonnard, Insurance Leader, sees signs of recovery in 2017 with stabilising profits, although life insurers may outperform general insurers. 14 Wealth & Asset Management Gillian Lofts, UK Wealth & Asset Management Leader, looks at the opportunities and challenges weaker economic growth will bring in Appendix 18 Contacts

4 Macroeconomic outlook The UK economy has demonstrated remarkable resilience following the shock of June s vote to leave the European Union. Riding a wave of robust consumer spending, GDP rose by 1% in the second half of the year. As a result, our outlook for 2017 has brightened. There are more challenges ahead, and Brexit-related headwinds will slow growth. A devalued pound will raise import costs, and subsequent inflation will cut into household spending power. This will hamper business investment and job creation as consumer spending slows. However, a weaker pound will also buoy the sterling revenues of companies with large overseas operations and over time, should support exports. 2% 3% 0.3% 1% 7.8% GDP rose by 2% in It is forecast to grow by 1.3% this year, against the previous forecast of 0.4%, falling to 1% in 2018 before rising back to 1.4% in Inflation will rise to close to 3% in mid-2017, its highest level since 2012, as higher import costs push up prices in shops. Household disposable incomes will fall by 0.3% this year, compared to a 0.3% rise in the previous forecast, reflecting higher inflation and uncertainty holding back the labour market. Business investment is forecast to fall, albeit less severely than previously expected. It is set to decline by 1% in 2017, and 2% in 2018, compared to declines of 2.4% and 3.1% in our previous outlook. Consumer credit soared by 7.8% in 2016, a nine-year high. However, this is set to slow to an average of 3% between 2017 and EY ITEM Club forecast Winter ey.com/fsitemclub ey.com/fsitemclub EY ITEM Club forecast Winter

5 Introduction A brighter, but challenging outlook Omar Ali Managing Partner, Financial Services, EY UK Ernst & Young LLP Although the uncertainty that followed the UK s decision to leave the EU last year continues, and will do so for some time, the UK economy demonstrated unexpected resilience in the second half of last year. As a result, the outlook for 2017 is better than expected. Following the referendum, the EY ITEM Club forecast was just a 0.4% rise in GDP in This has been revised upwards to 1.3%. However, whilst we won t see the economy contract, GDP growth is forecast to slow further to 1% in 2018, and will remain lower than 2% for the remainder of the decade. What does this mean for financial services? After what we had come to see as a lost decade of growth after the financial crisis, it is disappointing that the return to stronger growth has been pushed further out but this forecast should be seen as encouraging. The outlook for the UK economy compares well to the forecast for many other developed economies: the US is forecast to grow by 2.3% next year but France and Germany will see their GDPs increase by just 1.5%, Canada 1.7% and Italy a much lower 0.6%. The context is also important. If in the days after the referendum we had thought we would see GDP growth of over 1% in 2017 or 2018, the unemployment rate hit an 11- year low, long-term interest rates improving and the prospect of base rate rising in the near future, I think we would all have been reassured. Whilst the outlook has improved, there are still challenges ahead and second-order impacts to be considered. Not least of these is the return of inflation. The return of inflation The industry has operated in an environment of low inflation for the past several years, and more importantly, so have consumers. But this is changing. Following the devaluation of sterling, inflation is set to climb to nearly 3% this year. Combined with weakening growth in job creation and wages, higher inflation will lead disposable incomes to fall by 0.3% this year. It doesn t sound much but this is worth 3b to the economy, which will have an impact on demand for financial products. Slowing growth will not have a uniform effect across financial services Weaker real incomes will hit consumer credit. Mortgage lending growth is also expected to drop from 4.4% in 2016 to 1.4% this year and demand for business lending is expected to fall. Overall lending will continue to increase but banks will need to think about the economics of their loan books. In the longer term, the prospect of an increasing base rate will give banks hope 6 EY ITEM Club forecast Winter ey.com/fsitemclub

6 that they will finally be able to widen the gap between lending and savings rates. A slowing economy will dampen demand for big ticket purchases, impacting general insurers. As a result, the growth in non-life premium income is forecast to slow to 2.3% in Life insurers, buoyed by climbing interest rates and an improved outlook for equities, will fare better. Premium income is forecast to rise by an average 3.5% until Asset managers had a relatively good year last year; the fall in sterling boosted the value of UK equities, which combined with healthy growth in household wealth, saw the total assets under management (AUM) in the sector climbing 12.3%. Whilst we won t see the same level of growth this year, cheaper sterling and resilient investor sentiment will buoy share prices and equity funds and mean that total AUM should still grow. total bank lending will stand at 6.2t, and AUM should reach 1.1t in For AUM alone, that s 18% bigger than even two years ago. The talent, knowledge and experience we have here, plus the depth and breadth of our capital markets will continue to drive global demand for UK financial services. Brexit and wider geopolitics have injected a level of uncertainty and volatility we have not seen for some years but the fundamentals of the UK financial services industry are solid. Hopefully the benign economic outlook will give the industry the confidence to continue to invest in the future of the industry, cement the UK s lead in FinTech, invest in solutions that make financial services easier to access and understand for the UK consumer, and help us to keep the UK industry at the forefront of the global market. We should have confidence in UK financial services Despite all the uncertainty, the economy is holding up. Although growth will slow, the outlook is brighter than six months ago. In this environment, the UK s financial services industry is set to perform relatively well. The EY ITEM Club forecasts that the domestic insurance market will see a combined total premium income of 271b, ey.com/fsitemclub EY ITEM Club forecast Winter

7 Mastering the tides of change Despite all the volatility in 2016, financial services displayed remarkable resilience. And as a result, our economic projections have improved when compared to six months ago. Yet, even though the industry is more prepared than ever to handle change, significant headwinds are on their way. 2% GDP growth in 2016 Banking and capital markets headwinds Close to 3% rise in inflation, highest level since % fall in household disposable income Consumer credit climbed by 7.8% A weaker pound boosted exports Insurance headwinds 4% slower growth in housing transactions in % increase in premium tax on premiums and profits Wealth and asset management headwinds Less than 1% rise Annual equity price growth in holdings in bond funds to slow to 7% from 2017 to 2020 Banking and capital markets The industry performed well in 2016 and finds itself in a stable position Total bank loans to climb from 6.1t 2016 to 6.2t in 2017 Mortgage lending grew by 4.4% last year Bank interest rate forecast to rise in 2018 Insurance 2017 should see profits stabilise, improved overall performance and life insurers benefiting from rising gilt yields Gilts providing support 10-year gilt yield to rise to average of 2.6% until 2020 Total life premium income to rise by 3.9% in 2017 Wealth and asset management In 2017, we predict slower growth and possibly a redefinition of business models AUM will total 1.1t this year, 5.1% higher than in 2016 Equity AUM to rise by 6.5% in 2017 FTSE All-Share Index rose by 12.5% in 2016 Undercurrents of uncertainty Brexit negotiations With talks to go on for a minimum of two years, uncertainty will linger over the UK s trading relationships Global political volatility The rise of protectionism in the US, potential trade disputes and the French and German elections are just some of the things that could impact the financial services industry Slowing economy in 2017 Reduced consumer demand and weaker spending power could pull back growth

8 Robert Cubbage Banking & Capital Markets Leader, EY UK Ernst & Young LLP Banking & Capital Markets viewpoint Meeting uncertainty head on Forecast highlights: UK bank assets grew by 11% in 2016, the fastest rise since They will grow by a slower 1.5% this year, and shrink next year, before modest growth returns in Growth in mortgage lending is set to slow to 1.4% this year, and just 0.1% in 2018, compared to 4.4% in The stock of business loans will reach 414b in 2017, as growth slows to less than 2%, before stagnating in Growth in consumer credit will slow, but still increase by 4% in EY ITEM Club forecast Winter ey.com/fsitemclub

9 Viewpoint Banking & Capital Markets Whilst Brexit remains a key challenge in the near distance, the economic outlook is better than expected in our last forecast. That said, exiting the single market is still set to cause a softening in the economy and slow the demand for credit, whilst the continued uncertainty over the exact nature of our future trading relationship with the EU will also weigh on the sector. However, banks strong performance in 2016 provides them with a solid base to face these challenges. Monetary policy changes prove a double-edged sword... The Bank of England s actions to alleviate the shock of the referendum result have been helpful for the economy, and combined with resilient consumer demand, helped support growth of 12.6% in total lending from UK banks in 2016, compared to August s cut in the Bank rate to 0.25% led to record low mortgage rates, whilst cheap funding through the Term Funding Scheme is incentivising lending, and will do so to its conclusion in February However, the impact has not been universally positive. The Bank s move to buy corporate bonds has reduced demand for business loans as firms make more use of bond finance. Compounded by the prospect of declining investment spend, the growth rate of bank lending to firms will halve this year, and flatline in Banks business lending will reach 414b in 2017, up from 406b in 2016, and will eventually climb to 419b in as rising long-term interest rates bring respite for banks Low interest rates also bring with them a drag on banks profitability, so there will no doubt be a sense of relief when the Bank rate finally rises, which is anticipated in mid In the meantime, the recent rise of global long-term rates is welcome news. In the UK alone, UK 10-year government bond yields have now more than doubled to 1.3% since August, and should average 2.6% over the next four years. This should provide some support for profits in the year ahead if banks are able to increase the gap between deposit and savings rates. Clarifying the impacts of Brexit will stay front of mind As we prepare to exit the single market, we may see costs rise for UK banks that wish to continue serving EU customers. An implementation period, mooted by Theresa May, would allow affected banks to avoid a regulatory cliff edge, whilst many are already taking tactical decisions that will enable them to protect cross-border operations. but banks should also keep an eye on the political changes elsewhere In the US, President Trump s more moderate approach to regulation of the banking industry includes proposed measures to reduce the scope of the Dodd Frank Act. A repeal of Volker is unlikely to trigger a rush back into proprietary trading, however, the subsequent reduction in regulatory administration and costs will certainly create a positive effect for banks with operations on both sides of the Atlantic. The current uncertainty about the new US President s economic plans may herald a period of market volatility and a sense of unpredictability about the economic outlook over the next few months. Safe haven assets may provide some protection against exchange rate fluctuations and the possibility of further weakening of sterling and UK inflation, if the US economy strengthens. Even so, the outlook brightens as banks take action Despite the political climate, a stronger economy has helped to brighten the outlook for the banking sector. But banks have also taken action to secure their future. Capital positions are improving, as the Bank of England s stress tests in December attest. There may be further pressure to build capital buffers when the terms of Basel IV are agreed, but UK institutions would be well placed to meet requirements compared to some of their international peers. Asset quality has also improved, with a reduced ratio of non-performing loans. At the same time, banks are investing in long-term business model transformation. The initial focus on revitalising front-office technology has now moved towards the mid and back office, as banks look to digitalise processes, and improve efficiency. Regulation is acting as a catalyst for technological innovation too, for example, the advent of Open Banking. Collaboration between banks and third parties will continue as banks look to improve the experience of their customers. The cost of transformation programmes has held back profits in the short term. But the benefits will begin to materialise over the medium term and should give UK banks a solid foundation to weather the political and economic headwinds. Growth in stock of lending set to slow % year Consumer credit Mortgage lending Lending to companies Forecast Source: EY ITEM Club, Haver Analytics, January 2017 ey.com/fsitemclub EY ITEM Club forecast Winter

10 Rodney Bonnard UK Insurance Leader, EY UK Ernst & Young LLP Insurance viewpoint Market movements offset weaker demand Forecast highlights: Pressure on real incomes will hold back non-life premium growth, decelerating to 2.3% this year and 1.5% in Car registrations in 2017 are set to fall back 5% from last year s record high of 2.68m. Life insurers are forecast to see premiums climb by an average of 3.5% per year until 2020, compared to average rises of 5.5% in the last five years. Increasing long-term interest rates will prove some support for insurance companies, with the 10-year gilt yield to average 2.6% until 2020, up from a post-eu vote low of 1.25% proved to be a challenging year for the insurance sector Despite surprisingly strong consumer demand, the sector s profits continued to be under pressure, falling by 23% to 7b should see a much-improved performance, with profits stabilising. Improved bond yields will support life insurers. The prospect of rising inflation will give general insurers some leeway to raise prices, which could offset some of the impact of reduced consumer demand for high-value purchases, but given the pressure of rising inflation on consumers, competitive pricing will remain vital. Market movements will give life insurers some breathing room Life insurers are subject to the ebb and flow of the financial markets; they faced a combination of low bond yields and extreme market volatility in They 12 EY ITEM Club forecast Winter ey.com/fsitemclub

11 Viewpoint Insurance nevertheless came through a difficult year relatively unscathed, and with their solvency intact. Volatility is likely to persist as the UK negotiates its departure from the EU, and as President Donald Trump begins to implement his policies. In response, insurers will scrutinise and adapt their investment strategies to mitigate the impact of short-term market swings, whilst protecting returns. An improvement in the global economy, combined with expectations of fiscal loosening in the US, will bring a welcome rise in bond yields: the forecast is for UK 10-year gilt yields to average 2.6% until 2020 twice the level they saw in the aftermath of the EU vote. This will reassure annuity providers, who have seen rock-bottom yields reduce annuity rates and as a result, consumer demand. Despite continued volatility, it is anticipated that equity prices will rise overall this year, buoyed by an improving global outlook and in the case of the FTSE, cheaper sterling. This should prove positive for flows into life products, offsetting some of the impact of a squeeze on household incomes. The EY ITEM Club expects life premiums to increase by 3.9% in 2017, nearly twice the rate predicted in our last outlook. These comparatively benign market conditions will be welcome as many insurers embark on a major programme of modernisation. Prompted by the FCA s Long-standing Customer Review, insurers are looking to rationalise their legacy IT estates and embrace digital customer journeys. This will be a significant investment over the next few years but should ultimately leave the life sector in better shape to fight back against increasing competition from asset managers, advisory businesses and banks. but a slowing economy will weigh on general insurers A slowing economy will weigh on general insurers performances this year, dampening growth in premium income. Weaker consumer spending will reduce demand for big ticket items, with car registrations falling back from their record 2.68m sold last year, and housing transactions rising by 4% this year and next, less than half the average rate seen in the last four years. Increased taxation also provides an additional challenge. The insurance premium tax has been increased to 12%, and insurers will need to consider how much of this they can afford to absorb. However, the economic momentum built in the second half of 2016 places the sector in better stead than envisaged six months ago. The return of inflation provides opportunity to increase prices, balancing out some of the effects of weakening consumer demand, and increasing operating costs. However, as consumers increasingly shop around to reduce household expenditure, price competition will remain vital for general insurers. In the wholesale non-life market, pricing is an even more prominent issue, as global competition takes its toll and ratings pressures bring profitability headwinds. Overall, non-life insurance premium income is forecast to climb by 2.3% this year, slowing further in Cost management and improving efficiency will therefore be high on the list of priorities in the year ahead to maintain margins, with robotic process automation, customer self-service and greater use of analytics all set to transform insurers cost bases. Brexit remains a concern as insurers take action The UK s ability to access the EU following our forthcoming departure from the single market is a key concern for the sector, especially for non-life firms. Whilst an implementation period looks possible, insurers are moving to put in place the right structures in the EU to allow them to trade from 2019, rather than waiting for the outcome of negotiations. However, these bring with them associated costs and resourcing requirements. Brexit may bring a silver lining for insurers if it allows UK regulators to fine-tune the solvency regime whilst maintaining equivalence. Relatively small changes to required solvency margins and capital requirements could attract insurers and customers back to classes of business they have found difficult, such as annuities. 2017: A year of quiet revolution? After coming to terms with extreme volatility in 2016, and despite the forecast of slowing economic growth, we expect insurers to push on with modernisation and development plans in 2017, with greater innovation to follow. And, whilst the recent changes to the discount rates for personal injury claims the Ogden Rate were expected, the extent of the drop will have far-reaching effects for insurers, particularly motor insurers, and in turn for insurance premiums. Uncertainty still remains as the Lord Chancellor has announced an intention to look at whether a fairer framework for compensation might be introduced. This could mean further changes in the near future so this story is not yet over. Regulatory pressure will be a driving force behind change. The European General Data Protection Regulations (GDPR), which take effect in 2018, will introduce more stringent rules on how customers data must be handled, but also offer the prospect of new opportunities. In particular, the Right to Data Portability will allow customers to authorise companies to consolidate the data held on them across multiple providers. Companies are starting to recognise that their current IT infrastructure is unlikely to be suitable for delivering GDPR compliance and are starting to look to big data solutions to help. Capitalising on the opportunities will also need new propositions that capture customers imagination and the emergence of standards for sharing data. In the meantime, 2017 is set to be a critical year for robo-advice. Uncertainty about the regulatory status and risks of automated advice solutions has led providers to be cautious so far, but the demand for greater help from customers is likely to lead more providers to consider automated solutions. ey.com/fsitemclub EY ITEM Club forecast Winter

12 Gillian Lofts UK Wealth & Asset Management Leader, EY UK Ernst & Young LLP Wealth & Asset Management viewpoint Finding growth in a slower economy Faced with a low-growth economy, global geopolitical uncertainty including Brexit, and regulatory pressure, now is the time for wealth and asset managers to find new routes to investment growth and build efficiencies. Forecast highlights: Total AUM will climb by 5.1% this year to 1.1t 1, compared to 12.3% 2 rise in Equity funds will continue to grow in 2017, with equity AUM to climb 6.5%, compared to 9.8% growth in The share of the sector s AUM in bonds is forecast to fall from 15.3% in 2016 to 13.6% at the end of the decade. Multi-asset funds are set to see slower growth in 2017, but will reach 192b by 2019, a 25% increase compared to Forecasting AUM held by UK investors 2 See chart for AUM forecasted growth 14 EY ITEM Club forecast Winter ey.com/fsitemclub

13 Viewpoint Wealth & Asset Management The asset management sector will no doubt take heart that the economic outlook has brightened since our last report, but it is not plain sailing. Forecast GDP growth of 1.3% remains weak compared to the rate seen in the last three years and will provide an ongoing challenge, tempering the growth in AUM 2. A changed economic outlook also brings opportunities. Whilst inflation may prove to be the biggest drag on economic activity, it could prove positive for asset managers. Savers appetite for risk is likely to increase, influencing asset allocations, as they look to equities and bonds to protect against inflation eating into cash savings. Rising household wealth will encourage savers The sector benefited from a climb in UK household wealth last year. It increased by 8.6% an 11-year high. Pension funds, which account for around half of total financial wealth, were the key driver in this increase on the back of rising bond and equity prices, plus auto-enrolment. Steadier, but still significant, predicted growth of 5.7% in household wealth this year will support investor sentiment towards asset management, and therefore savings inflows. Nevertheless, rising inflation will squeeze households spending power and ability to save in the longer term. With the UK still a nation of spenders, there is still much the industry can do to educate consumers and incentivise saving with new solutions and services. Slow economic growth and rising inflation will see steadier growth in AUM Helped by the strong performance from the UK FTSE, and the fall in sterling which indirectly boosted the value of UK equities 2016 delivered a far better year than expected for AUM. Total AUM grew by 12.3% to just over 1t 1, well up on the previous year s 7.7%. Despite this, we re still expecting a slowdown over the next few years as inflation rises and the economy slows. AUM are forecast to rise by 5.1% this year, reaching 1.24t by but also spur investors to shift asset allocation to chase returns As investors seek to maximise their returns in the face of rising inflation, we will see a shift in asset allocation. The trend of equities being slightly more attractive than bonds continues, helped by a brighter outlook for the global economy and in particular, for the US. This will see the proportion of the sector s assets held in bond funds fall from 15.3% last year to 13.6% by the end of the decade. UK equities benefited heavily from the depreciation in sterling 2016 saw the value of equities under management rise by 9.8%, a three-year high. The boost to the sterling value of the overseas earnings and assets of UK corporates, and the cut in interest rates to a historic low 0.25% were amongst the factors behind this increase. A smaller rise in the value of UK equities in 2017 is predicted to lead to equity funds growing by 6.5% this year. This reflects expected weaker economic growth, and the effects of the depreciated sterling beginning to ease. By contrast, assets held in money market funds are set to fall back this year, following strong growth in Multi-asset funds are also set to see growth stutter in the short term, as the improved global outlook and strong performance from equities ease these funds recent market outperformance. Brexit unknowns provide pause for thought The uncertainty surrounding Brexit still poses a risk to growth, and its potential impact on the industry s pan-eu manufacturing and distribution model is a key concern. However, Brexit is not the only geopolitical risk on the horizon. Elections in Europe, a new approach from the new US administration and changing dynamics between global superpowers all have the potential to weigh on the growth. Scenario planning, therefore, remains a priority for asset managers. as asset managers seek alternative routes for growth Longer term, challenges abound for both asset managers and investors. With an uncertain economic and political backdrop, it will be hard for them to achieve more than 4% growth unless they broaden their horizons. For instance, the performance of the gold market may provide a source of long-term growth, with the London Bullion Market Association predicting prices to rise in The growth of the European private lending market may provide opportunity too, with it expected to reach 15% of SMEs financing by 2020, up from 6% in Disruptive technologies and new products should also provide new routes to growth. The FinTech revolution, for example, continues at pace seeking to provide new ways of operating, interacting and delivering access to new investment horizons. Growth in household wealth reached an 11-year high in 2016 % year Source: EY ITEM Club, Haver Analytics, January 2017 AUM forecast to see some bond-equity shift b Bonds Mixed Fund of funds Equities Property Money market Source: EY ITEM Club, Lipper FMI, January 2017 ey.com/fsitemclub EY ITEM Club forecast Winter

14 Appendix Forecasts of the UK economy (Annual percentage changes unless specified) GDP Consumer prices Average earnings Unemployment rate (%) Government net borrowing (% of GDP) month interbank rate (%) Effective exchange rate Source: EY ITEM Club, January 2017 Insurers will benefit from recovery in long rates Households real incomes set to fall this year % yield on gilt % year January August June Source: EY ITEM Club, Haver Analytics, January 2017 Maturity (years) Source: EY ITEM Club, Bank of England, January FTSE set for a reasonable performance in the near term Borrowing costs have hit new record lows % year % ,000 personal loan New mortgages Source: EY ITEM Club, Haver Analytics, January 2017 Source: EY ITEM Club, January EY ITEM Club forecast Winter ey.com/fsitemclub

15 Banking & Capital Markets Total assets ( b) 6,289 7,036 7,144 7,124 7,166 7,317 Total loans ( b) 5,419 6,102 6,190 6,188 6,242 6,385 Consumer credit ( b) Write-offs (% loans) Business/corporate loans ( b) Write-offs (% loans) Residential mortgage loans ( b) 1,110 1,159 1,175 1,176 1,182 1,205 Write-offs (% loans) Deposits (% year) Loans/deposits (%) Total income ( b) Source: EY ITEM Club, January 2017 Insurance Life gross premium ( b) % year Life gross claims payments ( b) Life claims ratio (%) Non-life gross premium ( b) % year Non-life gross claims payments ( b) Non-life claims ratio (%) Net profit ( b) Source: EY ITEM Club, OECD, Swiss Re, January 2017 Wealth & Asset Management Total Assets Under Management ( b)* 932 1,047 1,100 1,135 1,181 1,242 % year Bonds ( b) Equity ( b) Fund of funds ( b) Hedge ( b) Mixed ( b) Money market ( b) Property ( b) Source: EY ITEM Club, Lipper FMI, January 2017 *UCITS and non-ucits assets ey.com/fsitemclub EY ITEM Club forecast Winter

16 Contacts Omar Ali Managing Partner, Financial Services, EY UK Ernst & Young LLP E: T: Robert Cubbage Banking & Capital Markets Leader, EY UK Ernst & Young LLP E: T: Rodney Bonnard Insurance Leader, EY UK Ernst & Young LLP E: T: Gillian Lofts Wealth & Asset Management Leader, EY UK Ernst & Young LLP E: T: Press enquiries Nicholas Parker E: T: Rosanna Lander E: T: EY ITEM Club forecast Winter ey.com/fsitemclub

17 Latest Insights EY ITEM Club UK Winter Forecast The Winter edition of our quarterly forecast for the UK provides a detailed economic analysis and forecast for economic activity for the period ahead, with commentary on the business implications from EY s Chief Economist, Mark Gregory. For more information, please visit ey.com/uk/item Plan B for Brexit Brexit is one of many tectonic changes affecting Europe. This survey investigates the impact of the referendum on foreign direct investors and their European ambitions. For more information, please visit ey.com/attractiveness fsinsights.ey.com The latest insights from our leaders. ey.com/fsitemclub EY ITEM Club forecast Winter

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