The UK Economy: Light at the end of the economic tunnel
Despite the turbulent times that have befallen the UK economy over recent years, experts are reporting a positive outlook. The impacts of coronavirus, Brexit and wider supply disruptions may still be taking their toll but businesses, families and property owners can remain confident.
In this article, we’ll take a look at what experts are saying about the likely trends and how it will impact businesses, families, and property owners.
According to Handelsbanken, a leading international bank, the UK’s near-term outlook remains a little uncertain as we continue to navigate our way through the aftermath of the pandemic and the ongoing consequences of the war in Ukraine. However, there are many positive signs that suggest the worst is behind us and a return to some stability is expected.
James Sproule, Chief Economist at Handelsbanken recently delivered a webinar at which he shared some detailed insights and data about the economy, including some thoughts about ‘what’s next’, including (some very brief headlines):
· The UK is unlikely to avoid a recession, but the expectation is that this will be a ‘mild recession’.
· The employment market is broadly good.
· Inflation has most likely peaked (end of 2022).
· Falling energy prices will drive inflation lower.
· Inflation will come down slowly.
· The bank base rate will increase to 4% possibly 4.5% but then it should stabilise. It’s unlikely to drop this year.
· We are unlikely to return to the ‘cheap money’ we experienced in the period 2015 – 2020.
· The impact of the pandemic on certain sectors:
o Flights at Heathrow – down 14% & passenger numbers down 18% from pre-pandemic levels.
o Hotel bookings in the UK – down 5%.
o Offices/property – no reliable data but indicatively 8% more people work from home on Friday’s.
o Online shopping (amongst other things) has created new behaviours and habits that will be hard to reverse.
o Property – all asset classes are expected to reduce in value.
· Overall, the outlook is not gloomy, in fact it’s quite positive. We should all be a little more optimistic, we’ve been through a lot worse.
What Does This Mean for Businesses & Families?
Businesses have something to be optimistic about: consumer spending increases, new investments in technology and a reduction of overhead costs associated with office space rental should all contribute towards improved bottom lines. Wages are also likely to rise, allowing families the chance to gain financial stability by saving more money for larger purchases such as homes or cars. Furthermore, inflation rates could stabilise and then reduce over time – providing some welcome relief through cheaper prices on everyday goods.
What Does This Mean For Property Owners?
Property owners could experience a welcome period of stability, with the likelihood that consumer spending will return and strengthen demand for housing.
All in all, while there are still many uncertainties surrounding how exactly the UK economy will look beyond 2023 after a number of uncertain years, it looks like there is light at the end of this long economic tunnel!