Finding income in a low growth world

ON UK INCOME

We remain disenchanted with the outlook for the UK domestic economy and see sustained low economic growth, low wage growth, persistent inflation (most of it imported) and negative real wage growth.

For companies dependent on domestic UK demand, the outlook for earnings growth appears challenging, with government spending crimped by reduced revenues and stubbornly high social and healthcare obligations, and consumer spending squeezed by declining real wages, rising tax and weakening confidence. The challenges involved in resolving the eurozone sovereign debt crisis remain, as do those associated with the so-called fiscal cliff (which has now morphed into “sequestration”) in the US. We would normally expect that these factors would tend to dampen economic growth for some years to ...