The UK Government is currently dealing with a political crisis with over 50 parliament members resigned from the government “in protest” of Prime Minister Boris Johnson’s leadership, the Robo.cash team recently noted.
Many events, like the Chris Pincher affair, raising taxes amid inflation, the “partygate” scandal, and the lack of proper governance have “created doubts about Johnson’s leadership among party members.”
British Finance Minister Rishi Sunak and Health Secretary Sajid Javid were “the first to resign, with many other party members following suit.” Finally, Boris Johnson announced his resignation, “leaving the Conservative party to appoint a new prime minister.”
Amid this political rejig, Nadim Zahawi was “appointed as the new finance minister, taking the reins from former minister Rishi Sunak.”
During his 12 years in politics, Zahawi has “served in some key roles such as Parliamentary Under-secretary of State for Business and Industry, Minister of COVID vaccine deployment, and the Education Secretary recently.”
The entire fintech sector in the UK is now “concerned about this development due to the monumental role played by previous finance minister, Rishi Sunak, that led the industry to new heights.”
As mentioned in a blog post by Robo.cash, peer-to-peer (P2P) lending “connects the people who want to lend money to the people looking to borrow money directly without the involvement of any bank.” The update from Robo.cash further explained that it has “been present for 17 years in the UK with the first firm, Zopa opened in 2005 having 76,000 lenders today.”
In the past five years (2017-2022), P2P lending has “grown at a rate of greater than 20%, making it an attractive source of funds for borrowers.”
According to Robo.cash, it is “a win-win for both borrowers and lenders as they have to incur less expenses while making higher profits.”
However, this industry has also “seen some obstacles.”
In 2021, Zopa had “to shut down its lending arm due to the stringent regulations imposed by the Financial Conduct Authority (FCA).” New rules have “made it difficult for companies to conduct business, but they are targeted toward the safety of lenders from loan defaults.”
As noted in the update from Robo.cash, Nadim Zahawi is “a former entrepreneur, co-founding nationwide polling company YouGov in 2000, and one of the wealthiest members of the parliament.” He is considered by many “as being business-friendly based on his favorable stance on lower corporate taxes and business debt financing.”
However, “not all looks good on the Zahawi front,” the Robo.cash team claims.
He has been “suspected of being involved in tax evasion along with misusing his position to approve government backed loans for Greensill Capital, which later collapsed after being declared a scam.”
Zahawi even “threw his name in the hat for the position of Prime Minister but was knocked out as he failed to meet the threshold of 30 votes.”
Sanjeev Gupta “thanked minister for key role in securing loans for Greensill.”
Zahawi’s impact on the fintech and P2P Industry “is unclear as he has not yet made a public statement about it.”
After being elected, Zahawi said his focus was on “rebuilding the economy,growing the economy and bearing down on inflation”. He is expected “to cut taxes to revive the economy due to a looming recession looming.”
As noted by Robo.cash, the current political climate in the United Kingdom “looks uncertain right now, with various exits in the parliament and the new prime minister yet to be announced.”
Yet, not all seems to be lost “with a growing optimism concerning the growth of Europe post the election of the new Prime Minister.”
The resignation of Boris Johnson “appears to be a relief for many countries around Europe as they look forward to building their relationship with the UK.”
Inflation and rate hikes around Europe will “play a key role in determining the future of the P2P industry as borrowers struggle to meet basic expenses.”