What’s going on?

The UK economy grew only 0.1% in July, 1/10 of the rate in June.

What does this mean?

• While June was the end of a notably strong 2Q, which saw the UK economy grow 5%. T
• Things are now very different in 3Q, however:
  • The government has withdrawn various economic support measures
  • The supply chain is being disrupted
  • Consumer spending has dropped significantly
  • The Delta variant has been spreading around

Why should I care?

The bigger picture: The currency goes the other way

• Following the news, however, the British pound was pushed higher relative to the US dollar. That might be because the Bank of England has stated its preperation to bump up interest rates in May 2022, which would make the currency appear much more attractive to any foreign investors.
• Goldman Sachs reckons that the plan would be delayed until 2023. And if the economy keeps struggling to make progress, that guess might be right.

Zooming out: You deserve a break, real estate

UK’s housing market also dropped in August, after the government revoked the tax incentives it offered at the peak of the pandemic. But it might make sense to take a rest, as the industry had to maintain low borrowing costs, lockdown-driven savings, and a property shortage if prices are maintained high.

Content source: Finimize (2021) Stress Test. Available at: https://www.finimize.com/wp/news/stress-test/ [Accessed on Sep 12, 2021]