UK economy slows down.

A few months ago everything pointed to the Bank of England raising interest rates, but it is amazing how quickly things change and how easy it is to fall into the trap of believing the predicitions in the press or of economists.  They are almost always wrong!

 

February and March saw bad weather hit the UK with the “Beast from the East” bringing heavy snow, basically everyone stayed at home that weekend which really hit retail sales badly, since then housing sales have been sluggish and the motor trade has been really hit hard.

 

My own opinion is that politicians always put a positive spin on everything and economist and newspaper forecasts are never right, so basically whatever the press are saying, something else is likely to be really going on.

 

I think the UK is entering a recession, it may be a shallow one, but it is caused by the usual economy cycles added to which are worries about wage growth and mortgage rate rises.  Only one third of households apparently have mortgages now which amazes me but all the same..

 

So I think that interest rates will stay on hold until the end of the year, and economic growth will be very slow the rest of the year, though unemployment is likely to drift downwards further.

 

I also expect a lot more high street names to get into financial difficulty in the same way that carpetright etc have.

The causes:-

  • Move to Internet based sales which will rise for a long time – meaning only retailers with strong web presences are going to see overall sales growth
  • Living wage increases and Apprentice levy costs
  • Business rates
  • Auto Enrolment cost increases

So life is going to stay tough for some time and more companies will be under financial pressures.

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