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EY forecasts UK bank lending growth to fall to 2.2% in 2027, a three-year low

EY's UK Bank Lending Outlook projects total lending growth slowing from 3.6% in 2025 to 2.9% in 2026 and 2.2% in 2027, with Middle East tensions and weaker demand cited.

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Image: Evening Standard
Image: City A.M.

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The story, neutrally told

EY forecasts that growth in total UK bank lending will slow from 3.6% in 2025 to 2.9% in 2026 and a three-year low of 2.2% in 2027. EY expects growth to edge up to 2.4% in 2028. The outlook points to Middle East tensions, higher energy costs and weaker activity weighing on borrowing demand.

Corporate lending growth is forecast to more than halve this year, from 5.3% to 2.1%, before recovering to 2.8% in 2027 and 3.9% in 2028 on renewed strategic spending. Mortgage lending growth is expected to rise from 3.0% to 3.3% in 2026, then fall to 2.2% in 2027 and 2028 as unemployment rises and income growth slows. Consumer credit growth is forecast to fall from 3.4% in 2025 to 1.9% this year and 0.4% in 2027.

Dan Cooper of EY said write-off rates should stay low, suggesting slower demand rather than worse credit quality, and that banks are well placed to support customers. City A.M. adds that Brent crude hit $114 this year after disruption to the Strait of Hormuz, and that Bank of England data showed mortgage approvals at 54,900 in August 2026, the lowest since December 2023. The Evening Standard adds EY's view that growth is still set to continue across all major categories and that the five-year average of 2% to 4% is above the 2015-2025 average.

Every sentence links to the reporting it rests on.

Left0 outlets

No left outlet in our sources has covered this story yet.

Centre1 outlet

Framing
Report on the EY forecast, leading with the slowdown but balancing it with resilience: write-offs low, growth continuing in all categories, banks well capitalised.
Emphasis
Detailed category figures and EY executives' reassurance about banking sector strength and credit quality.
Leaves out or plays down
Does not include oil price levels or the latest Bank of England mortgage approvals data.
For example
“The UK banking sector remains resilient and well-positioned to navigate this period of slower activity” — Evening Standard

Right1 outlet

Framing
Shorter piece stressing borrowers feeling the pinch and growth 'stalling', tied to Middle East oil disruption and weak mortgage approvals data.
Emphasis
Energy prices, Brent crude at $114, and Bank of England approvals at the lowest since December 2023.
Leaves out or plays down
Leaves out consumer credit forecasts, write-off rates and EY's reassurance on bank strength and credit quality.
Charged language
“stall”“feel the pinch”“soared”
For example
“Growth in UK bank lending is forecast to stall in the coming years as borrowers feel the pinch of uncertain economic conditions.” — City A.M.