Although the UK economy faces a number of challenges, including high living costs and a falling standard of living, a repeat of the stagflation of the 1970s remains unlikely and employment levels remain high. Meanwhile, investment volumes reached £13.7bn in Q1 2022, 14% up y/y , and yield compression continues across all sectors.

• The Office for Budgetary Responsibility estimates that real living standards are set to fall by 2.2 per cent in 2022-23, one of the largest falls ever recorded, with living standards not recovering until 2024-25.
• While growth forecasts have been revised downwards, survey data shows businesses continue to expect growth this year and plan to increase hiring.
• UK Investment volume reached £13.7bn in Q1 2022, 5% above the 10-year Q1 average. Central London had its strongest Q1 since 2017.
• Weight of capital continues to push yields down, while 10-year gilt yields have touched 2% this month, bringing prime UK property’s risk premium over the risk-free rate to its lowest level since 2016.

Click to read UK Economic & Real Estate Briefing - April 2022