DAVY VIEW

The UK economy was flat in June and grew 0.6% in Q2, in line with consensus forecasts. However, we believe there are grounds for optimism heading into the second half of the year. Momentum looks positive for key sectors behind economic growth, especially within services. While services inflation and underlying wage growth remain high, they appear to be abating. This disinflationary trend alongside a growing economy are broadly aligned to a soft landing. The Bank of England is poised to reduce interest rates further, which stands to benefit households – which so far in 2024 have not been a major driver of UK economic growth.