UK market review: “No ifs or buts”

UK inflation continued to surge during June as higher prices for food and fuel pushed up the annualised rate of consumer price inflation from 9.1% in May to 9.4%. A survey conducted by the British Chambers of Commerce found that 82% of UK firms cited inflation as a growing concern for their business.


  • IMF downgrades forecast for UK economic growth
  • Profit warnings from UK listed companies doubled in Q2
  • Retail sales volumes continue their decline

Inflationary pressures continue: UK inflation continued to surge during June as higher prices for food and fuel pushed up the annualised rate of consumer price inflation  from 9.1% in May to 9.4%. A survey conducted by the British Chambers of Commerce  found that 82% of UK firms cited inflation as a growing concern for their business, and 65% of firms expect to raise their prices. Nevertheless, Governor of the Bank of England (BoE) Andrew Bailey  vowed to curb inflationary pressures, stating: “There are no ifs or buts in our commitment to the 2% inflation target. That’s our job, and that’s what we will do”.

“The IMF expects the UK to post the weakest growth amongst its G7 peers in 2023”

Banks remain robust: the economic outlook for the UK and the rest of the world has “deteriorated materially”, according to the BoE’s Financial Stability Report . Nevertheless, the BoE reported that the UK banking sector is well positioned to withstand a severe economic downturn, although banks will have to increase the amount of money held in reserve to deal with financial shocks.

UK trails G7 peers: the International Monetary Fund  expects the UK to post the weakest growth amongst its G7 peers in 2023, which cut its forecast to 3.2% this year and 0.5% next year. Having contracted in April, the UK economy  expanded by 0.5% during May. The FTSE 100 Index  rose by 3.5% during July, while the FTSE 250 Index  climbed by 8%. 

Companies under pressure: profit warnings from UK listed companies doubled year on year in the second quarter of 2022. A quarterly study undertaken by EY  found that UK listed companies issued 64 profit warnings during the period, led by the consumer sector, which continues to face difficulties in passing on higher prices to customers. On average, the UK’s chief financial officers (CFOs) believe there is a 63% probability that the UK economy will fall into recession during the next year, according to a survey undertaken by Deloitte . Although 86% of CFOs expect inflation to remain above 2.5% in two years, 68% believe that economists are underestimating prospects for inflationary pressures. 

Consumer weakness: the British Retail Consortium  reported a continued decline in UK retail sales: volumes are falling at a rate not seen since the depths of the pandemic. Meanwhile, a poll undertaken by YouGov/CEBR reported that consumers’ confidence in the UK economy  had continued to deteriorate.


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