Overview
The UK equity market got off to a strong start in 2015, growing by over 8 per cent by mid-April, driven by an improving outlook for global and European growth. However, a renewed fall in commodity prices has hurt the share prices of the basic materials and energy companies that make up 16 per cent of the FTSE All Share. Thanks to the summer sell-off, both the FTSE 100 and the FTSE All Share are now in the red year to date, providing an attractive entry point for investors who missed the earlier market rally.
The UK economy continues to pick up pace
The UK has recently been one of the best-performing developed market economies, with an average growth rate of 1.9 per cent year on year over the last 12 months – well above the G7 average of 1.1 per cent year on year. It was the fastest-growing economy in that group in 2014, when national output expanded by 2.6 per cent.
Such strong growth is beginning to pay off for UK workers, with wages now starting to rise after years of falling living standards. As shown in the bottom right-hand chart, UK wages have grown in real terms for the last nine months, the longest period of sustained real wage growth since the global financial crisis began in 2007.
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