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British workers are poised to take a bigger hit to living standards than their peers in other develo



Essentials such as energy bills and groceries have risen in price even more quickly than the current headline inflation rate of 10.1%, boosting the use of discount supermarkets and food banks, while adding fuel to what’s already the most widespread industrial action in a generation. Bank of England economist Huw Pill found himself in hot water last month when he suggested that Britons “need to accept” that they’re poorer instead of trying to claw back the effects of inflation.

That said, in Italy, things are even worse, with real wages falling at a rate closer to 6%. The fact that respondents see the UK as leading in the race to the bottom nonetheless implies a belief both that the UK’s inflation problem will remain more intransigent than that of other nations, and that the current pace of wage growth may not be sustained as the red-hot labor market starts to cool.





The gloom over the UK’s prospects extends to the outlook for the housing market. Canada — where prices are already down by 16% from their peak in 2022 — is expected to see the biggest decline in house prices in the G-7 this year in nominal terms, according to Bloomberg’s survey. The UK — where prices are so far down around 3%, according to Nationwide data — comes in a close second. In third place, with just under a quarter of all votes, is the US, where national prices are still managing to rise, up by 2% year-on-year in February, according to the most recent S&P CoreLogic Case-Shiller Index reading.


Certainly in terms of investment opportunities, professional and private investors agree that houses are not the place to have your cash in the UK this year. About 45% of respondents favor the large-cap FTSE 100 index over other UK investments. Given the general lack of confidence in the UK’s economic outlook for 2023, this makes sense. Most FTSE 100 company revenues are generated overseas, whereas the mid-cap FTSE 250 has a more domestic focus.





In one of the few significant differences of opinion between the two camps, professional investors are more bullish on UK gilts than private investors, implying that they expect UK interest rates to fall before the end of the year, which in turn suggests concerns about recession


The MLIV Pulse survey also solicited ideas on ways to improve the UK’s economic prospects. In line with the jaded tone, several respondents called for a new government, while an even more disheartened handful said that nothing could be done to improve Britain’s lot. Inevitably, “reverse Brexit” or a variant thereof accounted for about a third of responses.

More constructively, another fifth called for the cutting or simplifying of business and income taxes, while some took up the topical theme of championing the City of London, suggesting that relaxing regulations or encouraging more investment by UK pension funds into equities or infrastructure would be a good idea.

Despite widespread concerns that London is losing its appeal as a destination for new company listings, the capital is expected to dominate as an equity-trading venue over other European cities in terms of volumes. The French stock market has overtaken London in terms of overall market capitalization, partly due to the weak pound.

Finally, while our new King might have reason to be concerned by the generally gloomy demeanor of his subjects, he will surely be relieved to hear that almost three quarters of those answering the survey expect the UK to remain intact in its current form by the end of his reign.

MLIV Pulse is a weekly survey of Bloomberg News readers globally, conducted by Bloomberg’s Markets Live team. Catch their insights via MLIV Blog on the terminal. For market-moving news and analysis on the UK, check out the Markets Today blog on the Bloomberg UK website.

This week, the MLIV Pulse survey focuses on the US debt limit standoff. Do you think it will hurt or help US stocks and bonds? Click here to share your views.

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