UK Economic Growth Set to Moderate Amid Rising Energy Prices

Deutsche Bank economists Sanjay Raja and Maui Brennan believe the UK's economic growth will moderate in the second half of this year. The country has been experiencing strong growth, thanks to investments in ICT (Information and Communication Technology) and AI-related sectors, as well as improving productivity.

However, they expect the growth momentum to slow down due to several factors, including the fading of temporary supports from the hot summer and World Cup, higher energy prices, retail spending fatigue, and seasonal drags on activity. This will lead to a squeeze on real disposable incomes, particularly with household dual fuel bills expected to rise in Q3 onwards.

The economists also predict that inflation will rise above the Bank of England's target in the coming quarters, after it has already hit its nadir.