‘Great’ isn’t an adjective that could be ascribed to Britain’s economy for a very long time now. We’ve had anaemic growth, our currency has troughed around all-time-lows and our stockmarket has dwindled to comprising less than a 4% weight in the global share index.
However, though the UK is way off being cool (Britannia) in the eyes of investors, we do share Andrew Bailey’s view that the economy has “turned a corner”. We’re not alone here in thinking things are looking up. There’s a marked improvement in UK consumer and economic data which has sparked some much-needed momentum.
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We take the view that the environment is right for this to continue and the ingredients are in place for UK assets to make up the relative losses they’ve endured during the past decade. Let’s park the assertions to one side and unpack some points.
Green shoots
The UK economy has enjoyed little in the way of economic growth in the period since Brexit. It’s not nothing, but significantly less than the US – which has grown above trend – and a bit less than the eurozone, which hasn’t exactly been flying. That looks to be changing.
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The latest economic numbers show a flip back to growth from recession and, importantly, it is a stronger number than expected. The UK is seen to have grown by 0.6% in the first quarter as compared with the 0.4% rate expected by economists surveyed by Bloomberg.
Also, we saw a lower-than-expected increase in government spending and an uptick in manufacturing and industrial production, with both measures coming in higher than expected. Green shoots are emerging.
Read the rest of this article in the June issue of Portfolio Adviser magazine
