Households well placed to spend more

It’s well known that the uncertainty caused by the Brexit bedlam probably contributed to GDP growth easing from 0.6% q/q in Q3 of last year to 0.3% or less in Q4. But it’s less appreciated that should a way out of the Brexit quagmire be found in the next few months, the economy is well placed to bounce back. In particular, with wage growth having risen to a decade high in October and CPI inflation set to fall back to the 2.0% target in a month or two, households are on the cusp of enjoying a sustained period of decent rises in their real wages for the first time since before the EU referendum and the global financial crisis. A resolution to the Brexit issue would then give households the willingness to spend, as well as the ability.