UK: Economy entering challenging period despite solid summer – ING

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According to James Smith, Developed Markets Economist at ING, there’s little doubt growth has stepped up a gear over the summer, helped along by better weather.

Key Quotes

“Growth remained unchanged in August, but that follows what was a pretty chunky 0.4% increase in July. This points to a decent overall third-quarter GDP reading in the 0.5/0.6% region, but with the sunny weather now largely behind us, the question is whether the economy can sustain this better performance.”

“We think growth will face a number of challenges over the next few months.”

“Firstly, of course, there’s Brexit.”

“The combination of greater uncertainty and the fact that real incomes are again being squeezed by the near-10% rise in petrol prices since March indicates the high street faces another challenging period.”

“With that in mind, we think there’s a risk that economic momentum slows again over the autumn and winter, which in turn means the Bank of England is unlikely to hike rates again before May 2019.”

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