Yet for at least 48 per cent of UK voters, optimism is proving very hard to muster at the moment. Brexit negotiations may not yet have begun in earnest, but the war of words has, and points to potentially irreconcilable differences between the opposing camps and evidence that the worst fears of those who voted to remain within the EU will be realised as the UK crashes out with no deal and a hefty Brexit bill to boot (€100bn at the last count). I am more sanguine, and believe a less damaging compromise for all parties will be reached; the EU has some yawning future budget holes to fill, which the UK will be prepared to do but only in return for a sensible way forward on trade.
Yet one has to be careful in distinguishing optimism from credulousness - I did not buy Theresa May’s explanation for calling a snap election as providing a stronger mandate for these fraught negotiations. In fact, I believe that regardless of Brexit there are good reasons to think that the UK economy may soon take a turn for the worse, that Mrs May realises this too, and knows that this would undermine her ability to win an election in 2020.
My main source of concern is the UK consumer. Having underpinned the country’s economic strength for so long there are signs that the ability to spend, spend, spend could be running out of steam. Inflation is rising, retail sales are weakening, house price growth is slowing, wage growth is non-existent, county court judgements are on the increase, yet consumer credit is still ramping up and up, with particular worries around the relatively new consumer car leasing model – all in all, a noxious brew that could have significant knock on effects across any sector with exposure, including property and financial services. For equity optimists there could soon be a way to play this pessimism, with shares in Britain's biggest debt collector, Cabot Credit Management, set to hit the market later this year – but that they are even contemplating a float suggests caution on consumers is warranted.
