UK still looking good, despite the ‘B’ word.
Compared to France’s stagnating economy, Italy dipping into recession, and Germany sailing close to the same, the UK keeps moving forward at a pace.
Retail sales, job growth, and the FTSE 100 have all seen increases since the last Monetary Policy Committee (MPC) meeting in March. Even the housing market has improved with people coming back to the market encouraged by more realistic house prices. The demand for mortgage lending should therefore create increases to saver rates, especially in the challenger bank sector, however these will in general be modest.
The third MPC meeting of 2019 on 2nd May will be held against a backdrop of low inflation, wage increases, and low global interest rates, giving no indication that the Bank of England base rate can at this stage increase. The extension of article 50 delaying Brexit has of course, added to the support for no change.
The Bank of England however has not given up the need to ‘normalise’ monetary policy and there remains concerns that denying savers in the long term will eventually cause financial inequality.
For now, though, our prediction will be that rates will have to remain unchanged.