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UK: Rising Savings Offer Limited Support For Future Spending (2/2)

UK
  • Despite the rise in savings, the UK household net equity position has deteriorated since the end of 2021 as a result of pension assets taking a hit – likely from the sell-off in gilts over this period.
  • The rise in savings thus offers limited respite for future spending, with consumption weighed down by multiple drags operating through the wealth channel (sluggish equity market, lower valuation of bond portfolios and the recent inflation adjusted fall in house prices) and the higher cost of credit.
  • Moreover, despite the new Labour government promoting a growth-focused agenda, plans and resources available for driving up productivity and incomes are limited, while overcoming the myriad bottlenecks in the housing market is likely to be a multi-decade challenge.

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