The forecast is based on a Brexit deal being reached by 31 October.
The 'subdued' economic environment continues to have an impact on lending with all three major lending classes forecast to grow less than 2% in 2019, according to the EY ITEM Club outlook for financial services forecast.
The forecast is based on a Brexit deal being reached by 31 October, with growth predicted to be lower if the UK were to leave the EU without a deal.
Omar Ali, managing partner at EY’s UK Financial Services, said: “The weak economic outlook continues to hold back demand for lending.
“It’s been a similar story for over a decade now and there’s little improvement in sight. Since the financial crisis, the expectation was that the economy would return to higher growth after a short period of sluggishness – this has never materialised and is not forecast to happen any time soon.
“Even if we reach a Brexit agreement by the 31 October, the outlook for the economy and borrowing isn’t expected to dramatically change.”
Mortgage lending is forecast to rise by just under 1% in 2019, the lowest level since 2011, whilst the housing market is predicted to remain steady as transactions are affected by weak demand and supply.
Business lending is predicted to rise 1.3% this year and 2.2% in 2020 according to the forecast.
Ali continued: “It might feel counter-intuitive to make big decisions about business mix right now in the face of so much political uncertainty.
“The preparations and investments that firms make now will determine their success in the next three to five years, and contribute to the UK’s leading position in financial services well beyond Brexit.”
This forecast comes as the UK economy grew just 1.4% in 2018, which was the slowest rate since 2009.
