UK Weekly Kickstart: When Weak Growth Meets Fiscal Limits

While UK GDP surprised to the upside in Q1, forward-looking indicators suggest a slowdown toward 1% growth, complicated by rising political uncertainty and a narrow £12bn fiscal headroom.

Key Takeaways

• 1.UK economic momentum is weakening despite a strong Q1 GDP print, with expected growth of ~1% over the next four quarters.
• 2.Fiscal headroom has significantly narrowed, increasing investor concerns and making tax increases on capital or wealth the most likely lever for consolidation.
• 3.Labour market slack is expected to limit second-round inflation effects, allowing the BoE to likely hold rates through year-end.

Table of Contents

• Equity Performance (in GBP)
• FTSE 350 Sector Performance
• Earnings Expectations and Revisions
• FTSE 350 Valuation
• UK Sector Valuation
• Style Performance
• UK Style Valuation
• Volatility, Skew, Dispersion and Correlations
• Flows and Positioning
• Comparison of European Indices
• Global Strategy Views: Indices and Asset Classes
• UK Exposure

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