Osborne ‘right’ to be concerned about UK economy
Colin Morton (pictured), Portfolio Manager, Franklin UK Managers’ Focus Fund, reacts to George Osborne’s 2016 economic warning…
Osborne is absolutely right to be concerned about the future of the UK’s economy as markets across the world enter 2016 with a bang. In less than two weeks the global outlook has seen significant deterioration with the continuing Chinese slowdown and oil prices looking set to pose a challenge for both real UK GDP growth and inflation levels. The worry is that the UK will be overly reliant on our own already indebted consumers to boost a struggling economy as other industries falter and our international trade partners feel the impact of the plummeting oil price.
The Bank of England is no doubt feeling the impact of international actions as whisperings of further US interest rate rises emerge from the Fed. We have nearly always followed the US’ economic lead but with the pound now down at a near six-year low against the dollar any prospect of a UK rate hike seems unlikely and our economic ambitions will be behind those of the States. The days of austerity are not yet over, the deficit still stands at GBP1.6 trillion and continues to grow, and in our increasingly connected world the stability of international economies will decide the fate of the UK in 2016.