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United Kingdom: Resilient Jobs With Sluggish Growth

Falling inflation and wage gains support consumption, but structural challenges limit investor upside on the London Stock Exchange

By EC Invest

Thanks to numerous job creations (683,000 in twelve months), the British unemployment rate remained relatively stable, at a low level of 4.4% in February.

ECI UK Labor Market Resilience GRAPHIC 920x320

The labour market's dynamism also encourages wage growth (+5.6% in one year), supporting household consumption and overall economic activity.

Inflation also is falling

After a difficult second half of 2024, with GDP stagnation in the third quarter and a minimal increase of 0.1% in the fourth, British growth will likely be stronger at the beginning of the year.

Other good news is that inflation continued to fall, falling to 2.6% in March from 2.8% in February and 3% in January.

Good news doesn't change the overall outlook

The moderation of inflationary pressures is favourable to household consumption. It also gives the Bank of England more room for manoeuvre to continue lowering key rates.

Unfortunately, despite the optimism, these latest favourable statistics do not fundamentally change the UK's weak economic outlook. GDP growth will be weak in 2025 and beyond, and the potential of the London Stock Exchange is limited.

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