The week ahead 15 July 2024 UK GDP beats forecasts
![](https://www-cdn01.avisonyoung.com/cdn-cgi/image/q=85/documents/193344065/199174516/The-week-ahead-2024.png/7f992df5-c6e0-2851-1240-881c6f42c9e0?t=1721208551668)
What to watch out for in the UK economy and property market this week.
The latest data shows that UK economy enjoyed stronger than expected growth in May, with GDP rising by 0.4% on a month-on-month comparison. This was double the consensus forecast of 0.2% growth. A rebound in May had been expected as weather-sensitive industries like retail and construction were hard hit in April due to rainfall that was 155% higher than average. However, this weather issue is likely to remain a pressure on the GDP figures, given the heavy rain seen so far in July. The news comes as the Starmer government announced its first steps to boost growth, such as lifting the ban on developing onshore windfarms. Also, the government said that it would use the pre-existing UK Infrastructure Bank as the basis of the new National Wealth Fund rather than setting up a new agency. This is intended to speed up the process of getting green investment into the economy.
Another important point to note from the May GDP figures is that on a three-month comparison there was strong growth for the professional, scientific and technical industries. This is interesting from a property perspective as such firms are major occupiers of office space, while lab space is often a preferred option for repositioning redundant office buildings. Separately, last week saw the Financial Conduct Authority announce a liberalisation of stock market rules intended to make the UK more competitive as a place to list shares. The news could have positive implications for office demand in UK cities with large financial sectors. While we believe the office market does need change of use to remove some redundant stock, we also anticipate a steady improvement for occupier demand as the economy strengthens going forward.
Data this week will give us a better idea whether the Bank of England will be able to cut the Base Rate in August – which is our current forecast. On Wednesday, inflation figures will be released and we are predicting no change at 2.0%, the Bank’s target level. The following day sees Labour market data published, and we are forecasting a decline in pay growth, which should ease inflationary pressures. The same day the ECB will announce its interest rate decision.
Things to watch for this week
Tuesday, July 16th
ZEW Euro Area Economic Sentiment Index, July
Previous: 51.3 Forecast: 51.0
It is likely the index will show a modest deterioration, in line with other Eurozone surveys published lately.
ECB Bank Lending Survey, Q2
We expect a further slight improvement in lending standards, but also for overall credit conditions to remain tight.
Wednesday, July 17th
UK CPI Inflation, y-on-y, June
Previous: 2.0% Forecast: 2.0%
We are forecasting both headline and core inflation to remain steady, which will increase speculation that a Base Rate cut is imminent.
Thursday, July 11th
ECB Policy Rate Decision, July
Previous: 4.25% Forecast: 4.25%
The consensus view is that there will be no change at this meeting, so the financial markets will be listening closely to what is said at the press conference for clues on how far away the next cut is.
Average Earnings Growth (Ex Bonuses), y-o-y, May
Previous: 6.0% Forecast: 5.6%
The labour market has been slowing for several months now, leading us to forecast a deceleration in pay growth.
![](/documents/49413923/49415301/James-Roberts-2021.jpg/43f1a71f-51ea-4eb7-a8b0-1b9e03d8f698?t=-1536905918)