Recession ‘unlikely to cause second exodus of P2P investor funds’

Confirmation that the UK is officially in recession is unlikely to cause a second mass exodus of peer-to-peer investors’ funds, but platforms may close, an analyst claims.

Official data earlier this week showed that the UK has entered its deepest recession on record, amid the pandemic.

Neil Faulkner, chief executive of P2P analysis firm 4th Way, has suggested all industries, including P2P, could see business closures as a result of the recession but said the level of investor withdrawals won’t be as dramatic as it was during the height of the pandemic.

“Investors already understood prior to the official gross domestic product figures coming out that the economy did very badly, so I don’t expect the news will lead to a second large exodus from investments,” he said.

“For example, we already have The Telegraph and other publications calling it a “lightning recession”, merely hours after the scale of the recession was confirmed.

“The ultimate, fast-working, barometer of how spooked investors are about economic news is the FTSE 100, which has actually gone up.”

Read more: P2P will survive coronavirus recession

Faulkner said lending criteria has already been updated by P2P lenders during the pandemic so there won’t be any more major changes.

He added that some investors are likely to reduce their investment holdings over the coming months but the smart ones will be looking for solid, well-priced opportunities.

Read more: Advisory experts back P2P lending sector to become mainstream investment class