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Will the UK be the best performer in 2024?

Key Takeaways

  • After a dismal couple of years for the UK economy, we expect to see a big improvement this year in both absolute and relative terms.
  • Inflation has been higher than in comparable countries, partly reflecting factors specific to the UK. These effects are diminishing and should drop out in the next 6 months or so.
  • The labour market is no longer super tight and the wage price spiral is operating in reverse. Five-year swap rates have fallen heavily and this is feeding through into lower mortgage rates.
  • Lower inflation and lower interest rates are improving confidence and boosting spending in a virtuous cycle. It’s improving the budget deficit too.
  • This is all good news for UK financial markets but there’s a lot priced in already. Nevertheless, we see a favourable background for the UK. No boom but better than we’ve seen of late, better than consensus expectations and possibly better than other countries.
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8 January 2024
Steven Bell
Steven Bell
Chief Economist, EMEA
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Will the UK be the best performer in 2024?

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