That was the broadly optimistic take on the current UK economy at the Barclays Travel Forum.
Francis Addai, senior investment strategist at Barclays, noted that recovery had been flat since 2022 “but it hasn’t been negative – there was only one quarter where growth was negative”, he said.
In China by comparison there was a huge discrepancy with large growth and large negativity “because they were locked down longer during Covid”.
“The outlook for the UK was bleak but we didn’t see the recession that was predicted. It’s more likely the UK sees flat growth this year – I think we will avoid recession but growth will remain flat.”
Addai said the reason for this was that employment remained “very high” and in terms of spend “UK consumers are still fairly strong”.
“A lot of people had high amounts of savings coming out of Covid, and the consumer was in the best condition they’ve been in for many years,” he added. “And right now although consumers feel they have less money, it’s not stopping them from spending on big-ticket items, which is interesting.”
He insisted he remained broadly positive about the future. “My outlook is things are better than they might seem and better than what the actual forecast is telling us.
“My sense of the UK economy is that, yes, things aren’t great but it’s a lot better than we would have expected. People still have money to spend and there’s not job losses, which should mean people will spend as inflation comes down.”
Despite his optimism Addai admitted he did have concerns around the UK’s inflation rate. Asked by Advantage’s Julia Lo Bue-Said “what’s currently worrying you?”, Addai replied: “The Bank of England raising interest rates and the cost of mortgages going up.
“Around 70% of mortgages are settled by five-year terms,” he explained. “These people haven’t been hit [by rising interest rates] yet. My fear is that if inflation doesn’t come down as quickly as I expect, that will be a huge negative on the housing sector. That’s one area I’m most worried about.”
Elsewhere, Addai discussed the banking failures of Credit Suisse and Silicon Valley Bank but said these seemed to be idiosyncratic and the impact on global banking “was expected to be limited”.
He was also asked about the growth in artificial intelligence and whether it might reduce negativity. However Addai insisted: “I think it will increase productivity – although it’s impossible to predict by how much”.
