UK unemployment continues to fall, average earnings are rising faster than prices, and the first hike in interest rates is not expected until the middle of the year. Together these factors are helping drive consumer spending, which in turn has emerged as the key engine of overall economic growth.
Potential headwinds do exist, however – primarily in the form of uncertainty over the future of the UK’s membership of the European Union (EU), or the potential for ‘Brexit’, the vote on which could potentially come in the latter part of 2016. As yet, this is having little impact on economic sentiment, although early polls suggest that the in/out vote is fairly balanced, which will likely lead to uncertainty further down the line.
Source : M&G Real Estate