Yorkshire mutual’s first chief economist named

Andrew McPhillips, 28, worked at the Treasury and various Whitehall departments before joining the Bradford-based mutual.

He told the Yorkshire Post: “I would say that in general I view myself as an optimist and have a positive approach to challenges.

“In the current climate however, with the markets nervous and confidence in the banking system at an all-time low, it is easy to fall into a trap of becoming overly pessimistic about the future.

“It is important to remain realistic and take a pragmatic view of developments in the economy.

“For Yorkshire Building Society, the situation is positive thanks to our approach of putting our members’ interests first rather than taking the risks that have caused trouble for the banks and I am certainly optimistic about the future for the group.”

Mr McPhillips is joining Britain’s second biggest building society at a challenging time for the wider financial services industry.

He will be responsible for gauging the market, setting forecasts and contributing to the strategic direction of the group. Mr McPhillips analyses economic data, including activity in the housing market such as house price movements, volume of transactions and lending.

He also studies the savings market, including consumer appetite for saving and which products are attracting retail funds.

While at the Department for Work and Pensions, he worked on unemployment forecasts, which is coming in useful in his new role.

“We don’t want to be lending to people who we think might be struggling,” he said. “We make sure we do the right thing by our customers.”

Asked about the wider economy and what is likely to happen, Mr McPhillips said: “Everything is going to be driven by developments in the eurozone.

“In terms of growth for the UK, as long as they can reach some political resolution in Europe, things look reasonable for the UK.

“There is no reason to get carried away. There will be no massive increase in growth. There will be stability over the near term.

“On a regional level, the region is quite well placed in its employment mix. It has quite a strong manufacturing base. It has increased its volume of exports, something the country needs.

“As long as Europe can sort itself out, then I think the future looks pretty positive for the region.”

He expects UK house prices to hold up, due to the national housing shortage and pent-up demand from homebuyers.

He said: “There are still people wanting to take the step on to the ladder. I can’t foresee a huge fall in prices in the near term.”

The housing market contains quite large variances within Yorkshire, as does London, where strong areas are driving the headline figure, while other areas are experiencing significant falls.

In terms of mortgage affordability, Mr McPhillips pointed out that wage growth has been low and inflation higher than expected.

He said: “There has been pressure on disposable income.

“Our arrears figures are very low and below the industry average because we take a robust approach to make sure that mortgages are affordable to people.

“But obviously as people’s incomes are squeezed, the low-rate environment is likely to remain.

“We expect low central bank rate to continue maybe another couple of years yet.

“If we do manage to get some recovery and some confidence returns to industry and the market, companies are sitting on quite large piles of cash at the moment that we need to get them to spend and invest.

“Wage settlements might start to increase again.

“Inflation is starting to track back down to the Bank of England target.”

Wage growth is possible, then, but this is largely dependent on an economic recovery taking hold in Europe to boost business confidence and unlock investment projects.

In the meantime, the Bank of England is considering another round of quantitative easing, adding to the £325bn already in circulation.

Mr McPhillips said: “Clearly each round is less effective than what went before.”

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