UK Economic Outlook 2022 20/06/22

2022 has proven to be a challenging year for most, with spiralling energy costs and a growing conflict in Ukraine. During the pandemic's peak, there was anxiety about how the economy would recover after the UK experienced its worst financial decline in more than 15 years.

The initial figures would suggest that having overcome many of our daily challenges through a successful vaccination program, and without considering prospective covid variations or rule modifications in the coming year, it is only reasonable to expect things to improve in 2022.

Many would agree that the pandemic is becoming a distant memory as the government continues to remove all remaining legal restrictions.

So what can we expect in 2022?

Despite some hefty cost of living increases, there is still plenty to feel optimistic about in 2022, with OECD (The Organisation for Economic Co-operation and Development) still predicting growth of around 4.7% as we approach the summer.

Their research indicates growing popularity for business investments, despite some remaining uncertainty in global supply chains. Imports and higher border charges are hampering exports due to the UK's exit from the EU Single Market, but this isn't proving to restrict the UK's upward economic trajectory.

Higher energy and commodity prices, as well as ongoing supply bottlenecks, will likely keep inflation rising. It is predicted to reach 4.9% in the first half of 2022, before falling to around 2% towards the end of 2023.

Giving stability to these predictions is the UK unemployment rate, which has continued to fall as demand for skilled workers across all corners of the country shows no signs of slowing. Average UK salaries have experienced a recent increase, as recruiters look to fill the growing demand from employers looking to capitalise on a growing market with more available disposable income.

The strength of the UK property market is also a key contributor to the UK's growing economic stability. Figures published by Nationwide, the UK's largest building society, have illustrated how UK house prices increased by more than 10% in 2021, the quickest growth rate in 15 years, demonstrating the power and stability of the country's housing market.

Nationwide also reported that the average UK property price touched a record high of £254,822 in December, up nearly £24,000 yearly. Prices are now 16% higher than before the covid hit in early 2020, a result that few economists predicted as the UK entered its first of a series of lockdowns just 18-months ago.

These strong figures are triggering a boom in demand for high-quality buy-to-let and off-plan property investments, particularly in the North West of England. With strong local demand from renters looking to move into the city due to a growing job market, pressure is growing on developers to deliver larger projects in shorter timescales.

As these trends continue, we can expect the next few years to be highly lucrative for any investors looking to build a property portfolio.

If you're interested in finding out more about the UK property, then get in touch with a member of the Elavace team today.