UK Economic Outlook
Insights from TPEX consultancy for decision makers.
The PM goes but the outlook does not improve.
Written SH on 2022-10-20.
In future tp . Tagged politics economy uk
The finical situation of the UK has shifted dramatically over the last few weeks as a consequence of government action outside of finical orthodoxy. Interestingly perhaps the market failed to identify the intention of politician to do as they said. As a consequence of these actions the UK finical outlooks look bleak with the ideology of the current governing party, had it not been conducting a leadership election, obstructing its ability to take required action. The likely felt recession, regardless of when it technically arrives it likely to be dramatic and all the more so due to the exhausted political leadership increasingly lacking invention.
What can we say regarding the condition of the typical UK consumer as this calamity gains pace.
In 2020 to 2021, one in seven UK families reported having no savings.UK GOV DWP, 2022. Family Resources Survey. online.
It always concerning that such data is significantly time delayed and it would be interesting to know if Government or the Bank of England has a more real time indicator. Consumers in this category are perhaps insignificant to most business as consumers of this sort perhaps offer little discretionary spending into the economy and are likely to have done so previously. Those who earn little, save little and spend almost all they have surviving.
42% of families had either no savings or investments, or less than £1500.UK GOV DWP, 2022. Family Resources Survey. online.
With a modest allowance of savings almost half of the families of the UK are represented. It should be observed that the amount of £1500 is far below the typically suggested rainy day fund, though the current structuring of UK unemployment benefits does devalue the purpose of such savings. While savings of this such are only a small part of what could be considered to be UK household wealth, the pension not yet claimed and the house value of the primary residency are of little value to the person lacking bread.
With such limited savings being present and there continued devaluation through inflationary pressures the upcoming years are likely to see a transfer of assets from the just about managing to those with already substantial wealth. The ideology of the current governments makes UBI systems unlikely and progressive redistribution undesirable. The current malaise is heightened by the current geopolitical situation but it is not the cause as the productive problem and inequality is historic. More concerning is the possible shift to the extreme within the political sphere, who will this be blamed on?
The age of abundance in the UK is perhaps concluding with a final reconcentration of wealth and this will cause transformative change.
Tenth Person
This likely recession will provide opportunities for asset acquisition and the further concentration of wealth. Such acquisitions will be driven by overseas investors attracted by the depressed value of sterling and those who have much, absorbing the default of the significantly leveraged. However, unless significantly changes happen in the political sphere the next UK election is likely to return a more progressive alliance which will see these outcomes as abhorrent. If the continuation of the current system is the priority significant restraint is required.
Future Imagining
If the more extreme outcomes of the next few years occur then the extremes of the future are significantly widened. A return to the single market perhaps looks increasingly likely as the economic situation changes and the Brexit dividend does not materialise. However, the hollowing out of the economy suggests business should look to focus on essentials or luxury goods. In the longer term the UK abundant resources of renewables, highly skilled workforce, location and historical stability offers optimism but only once the citizenry requires excellence of it leadership once again. Another possible outcome is significant political distress which leads to even more extreme government forms.
References
UK GOV DWP. 2022. Family Resources Survey. [online] Available at:
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