Reduced risk of recession. Wages support purchasing power. Inflation declining too slowly. Relaunch of rate hike cycle. Capital and real estate markets in disarray. Favorable valuations for equities.

Key points

• British economy still flirting with recession
• Difficult 2nd quarter ahead
• Further worrying declines in leading indicators
• Nominal wages continue to rise
• Household confidence strengthens gradually
• Inflation still falling too slowly
• BoE forced to maintain restrictive policy
• Towards new highs for interest rates
• Sterling benefits from more attractive yields
• Real estate collapses in the face of rising interest rates
• Significant discount for UK equities

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