Return of risk appetite to benefit UK assets

A continued return of risk appetite as the economy slowly recovers from the coronavirus crisis will boost equities and the pound so long as there is a compromise on Brexit. But with the Bank of England likely to keep interest rates close to zero and do much more QE, we expect gilt yields to stay low for many years.
Andrew Wishart Property Economist
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UK Economics Weekly

At risk of stalling, but Q3 may make up for Q2’s weakness

This week brought further signs that the “pingdemic” weighed on economic activity and evidence that in June, consumers amassed excess savings at a faster rate than in May. As a result, there’s clearly a risk Q2 GDP growth will be weaker than we previously thought. However, with the “pingdemic” likely to ease over the next month, COVID-19 case numbers falling and our CE Mobility Tracker and new electronic card payments ticking up, we are sticking with our forecast that GDP will return to its pre-virus peak in October. Even so, it’s clear that any further big gains in activity may have to wait until August.

30 July 2021

MPC Watch

Divisions emerge, but early end to BoE’s asset purchases unlikely

While the Bank of England will upgrade its near-term forecasts for inflation in its Monetary Policy Report (MPR) published on 5th August, it will probably still judge that the rise is transitory. And while Monetary Policy Committee (MPC) member Michael Saunders may break ranks to vote in favour of an early end to the Bank’s net asset purchases, we do not think others will join him in signalling that interest rate hikes are drawing closer.

29 July 2021

UK Data Response

Money & Credit (Jun.)

The money and credit data showed that consumers were willing to take on more debt in June. However, with consumers accumulating excess savings at a faster pace, there were signs that the resurgence in virus cases may have triggered some consumer caution, which could weigh on the recovery.

29 July 2021

More from Andrew Wishart

UK Housing Market Update

Should we be worried about rental arrears?

The early evidence suggests that the end of the evictions moratorium will not result in a huge wave of evictions. And while the end of the furlough scheme presents a risk, we suspect that the easing of restrictions will have allowed the economy to recover enough by that point to keep tenants in both their jobs and their homes.

11 June 2021

UK Housing Market Data Response

RICS Residential Market Survey (Dec.)

Sales and prices rose further in December, but there were clear signs that momentum was waning even before the new lockdown was imposed. Indeed, with the end of the stamp duty holiday looming, most surveyors now expect prices to fall. We forecast a 5% drop in house prices this year.

11 June 2021

UK Housing Market Data Response

RICS Residential Market Survey (May)

The looming end of the stamp duty holiday has only applied the slightest dab to the brakes of the housing market thus far. But while the new buyer enquiries started to ease, sales instructions fell more sharply suggesting that strong demand relative to supply will continue to push up house prices in the near term.

10 June 2021
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