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House prices and higher inflation to hit consumers post-Brexit

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Written by: Hannah Uttley
24/06/2016
Consumer recovery 'looks set to fade' as a vote to leave the European Union is likely to see exchange rates push inflation and house prices higher, economists have warned.

Analysis published by the Centre for Economic and Business Research (Cebr), said that business activity and job security looked fragile as news hit the markets that the UK had voted for a Brexit.

Despite this, Cebr said that while sterling was increasingly fragile, pressure on inflation could be offset to some extent by further interest rate cuts.

However, even if consumer expenditure continues its upward trajectory over the next 18 months, the Cebr said growth will only average about half the 2.8% seen in 2015.

It’s also unclear whether this will be a short-term factor, the Cebr said.

“The decision of the UK electorate to leave the EU in yesterday’s referendum has already had far reaching effects on financial markets and the uncertainty caused by the vote will no doubt feed into the real economy over the coming weeks and months,” it said.

“Even under a vote to remain we expected a notable slowing of growth in the household sector as inflation recovered. With exchange rates set to push inflation higher, the consumer recovery looks set to fade.”

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