Outlook on the United Kingdom: April 2023

Lazard's Outlook series provides a forward-looking view, over the short, medium, and/or long term, of asset classes, sectors, regions, or countries from the view of Lazard Asset Management. In this edition, LAM portfolio managers share their outlook for the United Kingdom in Q2 2023. 

Summary

Although its growth remains sluggish, the U.K. economy weathered the winter better than many predicted. Buttressed by a tight labour market and better news on energy prices, our U.K. equities team continues to anticipate a slow but steadily improving outlook for the all-important U.K. consumer.

Meanwhile, interest rates are now close to their peak, albeit inflation is proving to be more stubborn than policymakers would like. Signs that Britain is beginning to repair its relations with its European neighbours under Prime Minister Sunak add to the case for buying unloved, under-owned, and undervalued U.K. equities.

• Higher interest rates have increased the stress on the global banking sector, but we see few indications of a major crisis brewing. The U.K. banking sector remains well-capitalised and tightly regulated.
• Although its growth remains sluggish, the U.K. economy has proved to be more resilient than many predicted. We continue to anticipate a slow but steadily improving consumer outlook while interest rates are now close to their peak.
• Political progress with the EU marked a welcome thawing of European relations and may be a step toward the U.K. stock market shedding its pariah status with international investors.

Click here to read our Outlook on the United Kingdom in Q2 2023.