Not all doom and gloom in the UK economy according to Dave Harris, Consultant for InvaTrust Consultancy, who joined Nick Batsford and Zak Mir on the Tip TV Finance Show.
No rate hike until 2017 for the UK
Harris outlined that Carney indicated a rate hike by late 2015, but now a UK interest rate hike seems to be pushed into 2017. He continued that we should kiss goodbye the relaxation of QE for 4 more years based on the wait for interest rates to reach 2% in 2020 as a result of new bonds being introduced.
US and Yellen isolated
Harris commented that with Yellen strongly indicating Fed interest rates will be hiked in December, which would isolate them and leave the UK on the easing side of the fence. He believed this would result in the GBP weakening against the USD, and also against the EUR, which is great news for exporters and overseas earners, but bad for UK tourist spending powers.
Positives and Negatives for the UK
Harris believed that the economy is seeing fairly robust wage growth, low inflation, and interest rates at 0.5%, which is good for domestic based companies. He added that economic figures released in the near future are likely to surprise to the upside with more UK spending. Harris highlighted that consumers have plenty of investment opportunities within the UK in exports and the high street. On the other hand, commodity prices will remain under pressure, and house prices are likely to remain high and go higher based on the lack of supply, which maintains the housing bubble but is bad news for first-time buyers. A final concern for the BoE and the UK is emerging markets, and it is too early to call the bottom of EM markets at the moment.
Watch the video to see Harris’ view on the FTSE 100, plus his opinions on Carney, Osbourne and the Conservative party.