Sterling’s weakness, and the UK’s underrated capabilities as a trading nation, are cushioning the economy. Don’t bet against the UK’s manufacturing and export sectors therefore.
However, the UK’s last property bubble was monstrous. For now, money flowing into the London property market from nervous foreign investors seeking security (60% of all new-build properties in London are bought by non-residents), and a housing crisis, has prevented the market from correcting across the whole country – though prices are sliding in the north. Property is likely to remain a key factor, and London could paradoxically see a property crash should the global economy recover or the euro-zone collapse – or interest rates normalise.
Looking further ahead, shale gas has enormous potential to benefit the UK – if the government abandons its per ton carbon taxes.