Monthly UK Economic & Real Estate Briefing – August 2020
The UK is facing its deepest recession since the 1930s, but encouraging business and retail data have kept alive hopes for a rebound in Q3, and real estate investment activity continues to pick up. However, there are significant downside risks to the outlook which will weigh on sentiment as we approach 2021.
- On a cumulative basis over the first half of 2020, the UK economy fell by 22.1%. The French economy declined by 18.9% cumulatively, with the German economy falling by 11.9% over the same period.
- Government support measures and the lifting of lockdown restrictions have had a positive effect on demand, but there are a number of downside risks to the outlook, one being the looming expiration of the post-Brexit transition period in December.
- The tentative recovery in investment market activity has continued into Q3. Yield-hunting investors are eager to make up for lost time with year-end in sight.
- However, uncertainties over the nature of the recovery will continue to weigh on overall investor sentiment. Our forecast for year-end transaction volume is £35bn, a c. 26% drop on 2019.