The impact of higher inflation on UK households and a decline in real wage growth mean the UK's financial services sector is in for a "tough" 2018, a report from the influential EY ITEM Club has warned.
According to the latest EY ITEM Club Outlook for Financial Services, inflation is set to peak at just over 3% in the second half of 2017. Meanwhile real household disposable incomes are forecast to decline by 0.2% this year - the first drop since 2013. Consultancy giant EY said the fall in household income is likely to dampen demand for mortgages and general insurance heading into next year. The combination of higher inflation and falling real earnings could further boost consumer demand for credit, however, as households attempt to compensate for the hit to their incomes by borrowing...
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