Economic momentum appears to have continued into 2017, but has been modest – growth in real GDP in the first quarter, at 0.2%, was below expectations. Consumer spending, the main driver of expansion in recent years, is being undermined by higher inflation, partly caused by sterling’s depreciation and modest growth in average earnings. As disposable incomes are being squeezed, households are under increasing pressure to be more cost conscious in their spending.
While political uncertainty has been a consistent feature in the UK recently, the labour market has been in rude health. The rate of unemployment, at 4.5%, is the lowest since 1975.
Source : M&G Real Estate