7th February 2017
UK Spending It While We Can
This week the standout event was the Bank of England’s move to keep interest rates at 0.25%. Fairly unexciting in itself, the guidance that came with it was illuminating.
While economic forecasts are imprecise, it seems since Brexit every change to a GDP figure has become a newsworthy event. The increased growth forecast has been no exception, but we sympathise with the bank over its miss. Much of what they predicted has come to pass: the pound is lower and business investment is stalling. These factors were expected to be a drag on growth, but economists didn’t predict the boost in consumer spending that has been more than making up the difference.
We can hardly blame them for not seeing that coming. Normally when faced with uncertainty people save more in order to boost their preparedness for any eventuality, yet shoppers have gone on a binge with the savings rate at record lows. It appears that faced with recent events consumers have adopted a “can’t take it with you” approach
Read our full market commentary below.