UK economy to post decent growth in 2016

The latest UK economic data suggests that GDP growth should advance at a steady pace in 2016 despite some headwinds from the global economy. Due to the gradually rising inflation in UK, consumer spending is likely to ease over the course of 2016. Weak sterling and supportive monetary policy will also help to boost the exports and economy as whole. Due to the lower level of inflation and subdued wage gain, BoE is unlikely to initiate a gradual monetary tightening cycle until Q4 2016.  

The biggest challenge ahead of UK is 'Brexit'. Prime Minister David Cameron is optimist about the deal, which could lead to a vote as early as June 2016. The main sticking point remains Cameron's desire to impose a four year ban on EU migrants from claiming in-work benefits. Cameron also wants to protect non-euro members from discriminatory changes to rules governing the EU's single market and incorporate other measures to increase national sovereignty.

According to Scotiabank, 'The UK economy is expected to maintain decent growth of around 2% in 2016, down from 2¼% in 2015. It added that UK will ultimately vote to stay in the EU.'