.png?width=280&height=112&name=PA%20Logo%20(Resized).png "Pepper Advantage")
UK Macroeconomic Snapshot - navigating uncertainty
2 minutes read time
The challenges of the UK economy continue and while 2024 economic growth initially exceeded expectations, it has recently shown signs of slowing. Monthly real GDP was flat in both June and July 2024, indicating a pause in expansion. Inflation rose by 2.2% in August 2024, unchanged from July. However, the resurgence of services inflation to 5.6% in August, despite a temporary dip in July (5.2%), underscores the ongoing challenge of taming inflationary pressures.
Despite the ongoing challenges, consumer confidence remained stable at -13 in August, unchanged from July. While confidence in personal finances has improved, expectations for the UK economy have slipped for the first time since February. As inflation has moderated over the past six months, real wage growth has increased to 2.2% in the May to July 2024 period, offering some relief to households. Additionally, the unemployment rate has slightly declined to 4.1%, contributing to a more favourable labor market.
We’ve seen a mixed picture for the housing market. Increased mortgage commitments, up 11.3% quarter-on-quarter by value in Q2, signal renewed activity, aligning with an uptick in new mortgage originations as seen in our own data. Furthermore, mortgage arrears data shows new arrears cases have decreased by 0.5 percentage points quarter-on-quarter to 11.0% of total outstanding balances in arrears. Despite this improvement, the level remains high, reflecting ongoing financial strain for some homeowners.
Overall, the UK economy is currently in a phase of cautious stability. While growth has moderated and some inflation pressures persist, there are positive signs such as improved real wage growth and a slight decrease in unemployment. However, the mixed signals from the housing market and consumer confidence suggest that a careful and vigilant approach remains necessary as the economy adjusts to these evolving conditions.
