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UK Real Estate Outlook - 1H 2016

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UK Real Estate Outlook

Expectations for UK economic growth have undergone some fairly significant downward revisions over the past six months. GDP for 2015 came in at 2.2%, someway below the 2.6% expected mid-way through the year, while the expectations for growth in 2016 now stands at 2.2%, down from 2.8%. The weaker outlook for growth in the UK is being largely driven by external factors, namely the slowdown in China and emerging markets, increased volatility in global financial markets and growing geo-political uncertainties.

Domestically the economy remains in relatively healthy shape, although the polarization in performance between the dominant services sector and the rest of the economy has been accentuated. Manufacturing and exports in particular are having a very tough time, initially squeezed by the appreciation of sterling against the euro, and now coming under pressure from the drop in demand for exported goods from emerging economies. And while the UK has a relatively low exposure to global commodity markets, the few remaining producers have come under severe competitive pressure, with several high profile sites being forced to cease operations.

Source : UBS AG

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