The Daily Update - UK growth

The UK Prime Minister has been warned that her government only has 6 months to secure a transition deal or start to rapidly lose jobs to the EU. Sir Howard Davies, chairman of RBS said that companies, including his own, would start the process of moving jobs, warning ‘If there are no details by the first quarter of next year, the number of moves of people out of London will accelerate’. The warnings come on the back of what is looking like a failed attempt by some senior Tories to oust May. There are now reports that May will reshuffle her cabinet after meeting European leaders Oct. 19-20; with the possible big loser in the reshuffle being Boris Johnson.

This comes off the back of economic figures that are looking increasingly fragile in the UK. As the global economy continues to grow, even at a lacklustre pace, with the help of sterling, UK exports have remained strong. However, this may be just papering over the cracks, as the UK growth has moved from a leader, to an also ran. Last month consumer spending fell 0.3%, with worrying signs that consumer spending through spare cash, on things such as recreation, dropping the most since July 2013. Added to this you have the housing market, always a gauge, rightly or wrongly, as to the wellbeing of the nation. In London, the housing market has at best been treading water, central London has actually fallen, with market data service Hometrack saying that the London property market is at its slowest in eight years. If this trend is to follow through nationally, and spending on nonessential items is to fall, the economy will look in an increasingly precarious shape.

The signs may have already stated, with new car sales falling across the UK for the sixth month in a row in September, down by 9.3% on the same month last year. It is the first time the key September market has fallen in six years. Although some of the fall can be attributed to concern over diesels and air quality plans, as Mike Hawes, chief executive of Society of Motor Manufacturers and Traders (SMMT) states, ‘September is always a barometer of the health of the UK new car market so this decline will cause considerable concern’ adding, ‘Business and political uncertainty is reducing buyer confidence, with consumers and businesses more likely to delay big ticket purchases.’

Another worrying sign for the UK is the rise in household debt in these uncertain times with the poorest most exposed to any financial shocks. This debt mountain is leaving households dangerously exposed according to the ratings agency Moody’s. Households have cut back on saving to fund spending, and so have less of a cushion. As Moody’s Greg Davies explained, ‘household debt is high and still growing, leaving consumers vulnerable to an economic downturn’, adding, ‘We expect that a slowdown in GDP growth - and a resultant decrease in consumer confidence - combined with a slower rate of buy-to-let lending will cause a decrease in house prices.’

Please read this important information before proceeding. It contains legal and regulatory notices relevant to the information on this site.

This website provides information about Stratton Street Capital LLP ("Stratton Street"). Stratton Street is authorised and regulated by the UK's Financial Conduct Authority. The content of this website has been prepared by Stratton Street from its records and is believed to be accurate but we do not accept any liability or responsibility in respect of the information of any views expressed herein. The information, material and content provided in the pages of this website may be changed at any time by us. Information on this website may be out of date and may not be updated or removed.

The website is provided for the main purpose of providing generic information on Stratton Street and on our investment philosophy for the use of financial professionals in the United Kingdom that qualify as Professional Clients or Eligible Counterparties under the rules of the United Kingdom Financial Conduct Authority (the "FCA"). The information in this website is not intended for the use of and should not be relied on by any person who would qualify as a Retail Client. Products and services referred to on this website are offered only at times when, and in jurisdictions where, they may be lawfully offered. The information on this website is not directed to any person in the United States. The provision of the information on this website does not constitute an offer to purchase securities to any person in the United States (other than a professional fiduciary acting for the account of a non-U.S person) or to any U.S. person as such term is defined under the Securities Act of 1933, as amended.

The website is not intended to offer investors the opportunity to invest in any Alternative Investment Fund ("AIF") product. The AIFs managed by Stratton Street are not being marketed in the European Economic Area ("EEA") and any eligible potential investor from the EEA who wishes to obtain information on the AIFs will only be provided with materials upon receipt by Stratton Street of an appropriate reverse solicitation request in accordance with the requirements of the EU Alternative Investment Fund Managers Directive ("AIFMD") and national law in their home jurisdiction. By proceeding you confirm that you are not accessing this website in the context of a potential investment by an EEA investor in the AIFs managed by Stratton Street and that you have read, understood and agree to these terms.

No information contained in this website should be deemed to constitute the provision of financial, investment or other professional advice in any way. The website should not be relied upon as including sufficient information to support any investment decision. If you are in doubt as to the appropriate course of action we recommend that you consult your own independent financial adviser, stockbroker, solicitor, accountant or other professional adviser. Past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. An application for any investment or service referred to on this site may only be made on the basis of the offer document, key features, prospectus or other applicable terms relating to the specific investment or service.

Where we provide hypertext links to other locations on the Internet, we do so for information purposes only. We are not responsible for the content of any other websites or pages linked to or linking to this website. We have not verified the content of any such websites. Such websites may contain products and services that are not authorised in your jurisdiction. Following links to any other websites or pages shall be at your own risk and we shall not be responsible or liable for any damages or in other way in connection with linking.

By using this site, you should be aware that we may disclose any information that we hold about you to any regulatory authority to which we are subject, or to any person legally empowered to require such information.

This website uses cookies to improve user experience, by clicking the "I Accept" button below means you consent to the use of cookies on our website.