Deutsche Bank Sees Higher UK Growth Risks Amid Fiscal Policy Shift

Deutsche Bank has shifted its view on UK economic growth, citing potential shifts in fiscal policy and stronger-than-expected momentum in certain sectors. According to the bank's research note, the UK economy may perform better than current consensus forecasts.

The upward revision in growth risks stems from a combination of factors, including resilient consumer spending and robust business investment. Recent data on retail sales and business investment have been more robust than expected, which could translate into stronger GDP figures in the coming quarters.

Additionally, the government's commitment to infrastructure spending and green energy transition projects may provide a sustained boost to economic activity. However, Deutsche Bank also pointed out that these positive factors could be offset by tighter financial conditions, as the Bank of England continues to grapple with above-target inflation.