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The Weekly Brief

Contributor Global Markets Insights Strategy Team

The outlook for the UK economy remains foggy as consumers digest the waves of political uncertainty that have become prominent since the Brexit referendum.

As this week’s chart shows, real wage growth continues to fall and is now negative. This has coincided with declining consumer confidence. Real earnings are beginning to feel the squeeze as the pound weakens, whilst retail sales also fell by 1.2% m/m in May. The weakness of this recent data suggests that the likelihood of a rate hike this year remains low, despite the recent noise from some members of the MPC. We think the BOE will wait for a pick-up in wages before increasing interest rates.

UK real wages and consumer confidence are falling
Index level (LHS), % change year on year (RHS)

Source: Bloomberg, GfK, Thomson Reuters Datastream, J.P. Morgan Asset Management. Data as of 19 June 2017.

The Weekly Brief (26 June 2017)
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