We have published a note this morning examining the health of the UK consumer. Our conclusions are despite undoubted political and confidence risk the underlying health is extraordinarily robust. We believe we are on the cusp of a significant increase in wage growth driven by a number of factors, but notably increased labour supply shortages, continuing employment creation, accommodate monetary policy, rising tax receipts giving £20-30bn of fiscal fire power and improving personal balance sheets.
While there are areas of weakness, notably big ticket items and house prices in certain parts of the country the primary risk is one of confidence and politics. Not BREXIT but the risk to the fragile consensus that relatively open free markets work best. The possible fracture of Conservative Party support clearly makes a change of Government more likely with potentially profound tax, deficit and redistribution policies resulting. 26% Corporation tax, proposed in the Labour's last manifesto, rather than the likely 18% next year, makes quite a difference to UK earnings.
Overall however we are optimists. The risks lie on the upside. Please do get in touch if you would like to discuss in more detail?