2017 look ahead: UK economy

With the Brexit vote and the subsequent plunge of sterling, the British economy has endured a trialling 2016 and it appears 2017 has even more in store.

The challenges being raised in 2017 include rising inflation, cautious consumers and sluggish growth, all of which are set to drag on the British economy. Charles Dumas from Lombard Street Research says that while Brexit was a blow, unemployment is low at 4.6%, which will help support an economy preparing for higher inflation. These rises in prices will hit average shoppers at their local supermarket which, as Charles notes, is simply inevitable.

Meanwhile, Chris notes the Bank of England governor Mark Carney’s mistake in cutting the benchmark interest rate and suggests a reversal may be on the cards for 2017. But aside from domestic issues, in a world of interconnected economics, ‘Trumpanomics’ will be felt on the British shores, but to what extent is still unclear.

Talking of international events, whatever Britain faces in 2017 will be impacted by the elections in Europe. This is especially evident in Germany, where the sense of disconnect is growing, as it was in Britain and the United States, arguably resulting in both the Brexit vote and Donald Trump’s victory. Ultimately Charles is confident Britain can weather the storm, as the latter part of 2016 was nowhere near as bad as the doomsayers were predicting.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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