UK economy finishes 2016 on a high
Theresa May’s speech will make little difference to the immediate future for the UK’s economy or housing market.
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Clarity that we will leave the single market will give greater certainty about migration and the reach of the EU law, but on trade, imperative to the UK’s economic success, there is still just as much uncertainty about what the future will hold.
The next steps will be key to achieving the best deal for Britain in negotiations. Much of that is outside of the Uk’s control, but knowing that we will not be part of the single market will mean businesses can begin to plan for the future with a clearer head.
The encouraging news is that the economic growth in the UK in 2016 means that we end the year 2.2% wealthier than at the end of 2015. This is the fastest growth among the major developed economies in the world. That performance is not to be sniffed at, but it is worth bearing in mind that this is already history.
The impact of the vote to leave the EU is only just beginning to affect the UK through inflation UK economy finishes 2016 on a high Theresa May’s speech will make little difference to the immediate future for the UK’s economy or housing market. 3 and without a significant uptick in Sterling it will continue to do so. The increase in consumer prices to 1.6% in November was above expectations and because it has been driven by rises in food prices rather than discretionary items, will eat into household budgets.
On the positive side, wages are increasing. The annual rate of wage growth increased to 2.8% in the three months to November. That is good news, but rising inflation is bearing down on real wage growth. After so many years of falling real wages and more inflation on the way, households will find things tougher in the months to come. Average wages today are 4% lower than in 2007 after adjusting for inflation. For the UK economy that is not such good news. Consumption and spending has been the dominant driver of the UKs economic growth and with greater pressure on household finances, continuing strength in this sector is in jeopardy.
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