Optimism in the UK economy arises with business output at a peak, though challenges linger with falling employment rates and the rise of ultra-long mortgages threatening financial stability.
The UK’s economic landscape is witnessing signs of improvement as business output reaches a near two-year high. According to a recent Business Trends report by BDO, this positive shift has been driven by heightened levels of confidence and increased spending within the services sector, attributed to greater disposable income among consumers. However, this upturn is accompanied by a declining employment index, which has dropped to its lowest point since February 2013, suggesting a slowing job market.
Adding to economic concerns, a former pensions minister has raised alarms over the growing prevalence of ultra-long mortgages in the UK, where 42% of new mortgages now extend beyond the state pension age. This trend has been propelled by escalating mortgage rates and poses potential risks for the financial stability and retirement security of younger homebuyers.
On the employment front, the Chartered Institute of Personnel and Development (CIPD) observes a transition from widespread job-hopping, known as the “Great Resignation,” to “The Big Stay,” where workers are prioritizing job stability. In response to rising inflation, employers are anticipated to increase wages by 4% in the next year.
Regionally, business activity is climbing, with areas like London, the West Midlands, and Northern Ireland noting growth, although Yorkshire & Humber experienced a modest decline. Despite the challenges highlighted in the job and housing sectors, the general perspective on the UK’s economic future maintains a measure of optimism.
