UK Economy on the Mend: Grounds for Optimism

Strategic Insights -

The UK economy has been facing headwinds, but there are strong grounds for optimism. Weaker than expected data showed a contraction in GDP in May, however, the latest Lloyds Business Barometer records that economic optimism reached a 10-month high in June, with overall business confidence hitting its highest level since 2015. The government's 10-year vision for financial services, new industrial strategy, and spending review set out an ambitious economic direction for the UK with PS725bn committed to infrastructure over the next decade.

Key Takeaways:

  • The UK economy is facing headwinds, but business confidence is returning, with economic optimism reaching a 10-month high in June, and overall business confidence hitting its highest level since 2015.
  • The government's 10-year vision for financial services combines with its new industrial strategy, setting out an ambitious economic direction for the UK with PS725bn committed to infrastructure over the next decade.
  • Deloitte's latest CFO Survey ranks the UK as the joint top global destination for investment, alongside India, a highly dynamic market with which the UK has one of its newly minted trade deals.
  • The government is signalling a welcome shift in the right direction by focusing on aligning regulation with the imperative of economic growth across every sector.
  • Practical steps to unblock planning, boost grid connectivity for electricity generation, and foster collaboration between Westminster, local authorities, and the devolved governments are being taken.
  • A strong economy needs strong banks, and a competitive financial services sector is needed to support the sensible risk-taking that allows businesses to grow and individuals to prosper.

Statistics:

  • Economic optimism reached a 10-month high in June, with overall business confidence hitting its highest level since 2015 (Source: Lloyds Business Barometer).
  • The UK's 10-year vision for financial services is combined with its new industrial strategy, setting out an ambitious economic direction for the UK with PS725bn committed to infrastructure over the next decade (Source: UK Government).
  • Deloitte's latest CFO Survey ranks the UK as the joint top global destination for investment, alongside India (Source: Deloitte).
  • PS725bn is committed to infrastructure over the next decade (Source: UK Government).

Sources:

  • Lloyds Business Barometer
  • UK Government sector strategy
  • Deloitte's latest CFO Survey
  • UK Government's new industrial strategy
  • UK Government's spending review
  • Financial Conduct Authority