UK growth engine seen to slow in 2016

London

THE strongest pillar of the UK economy may start to wobble in 2016. Having boosted growth for nine straight quarters, consumer spending could be up against restraints next year that will curb its momentum. For now, the shopping party continues, with data on Thursday showing annual retail sales growth exceeding 5 per cent in the past three months.

A pick-up in inflation, albeit gentle, anticipation of a Bank of England interest rate increase and a continued fiscal tightening by Chancellor of the Exchequer George Osborne could put a squeeze on households till next year. While a cooler spending pace will not spell the end of the economy's growth streak, it will increase the burden on trade, which has detracted from growth so far this year.