UK, economy in meltdown, but hope for recovery opens up

Housing sector in meltdown, poverty on the rise, inflation out of control: this is how Britain looks today when reading the country's macroeconomic data.
Yet, in what at first glance seems to be a catastrophic market, interesting prospects are opening up for Italian companies: on the one hand, the bond between the two countries has been strengthened following the recent visit of Italian Prime Minister Giorgia Meloni to London to meet Rishi Sunak; on the other hand, this crisis is expected to be a short-lived phenomenon that will soon give way to an interesting rebound for Made in Italy, not only for consumer goods, and for the leading sectors of food, fashion, furniture and mechanics, but also for the construction industry.

The signing of the post-Brexit bilateral memorandum of understanding between Italy and the United Kingdom will facilitate the dialogue between companies from the two countries, which neither side has any convenience in interrupting. The market across the Channel remains crucial for our economy: in the packaging sector (see the latest "Cube 2026" report by the Mecs-Ucima study center), the UK is the eighth most important market in the world, with a €1.2 billion demand for packaging technologies. And although the growth rate in the coming years will penalize it (+2.4 percent, well below the global CAGR of +3.8 percent), the British monarchy will still remain in the top-20 most attractive markets for Italian technology manufacturers and exporters. 

The current difficulties in the British market are evident, so much so that local media have gone so far as to call the current crisis the longest recession in 100 years for Great Britain: leaving the European Union has had heavy repercussions, including drops in productivity and foreign trade and strong political instability, demonstrated by the three leadership changes in the past year and general discontent among the population. This strong political uncertainty goes hand in hand with considerable economic insecurity in the United Kingdom: housing investment plummeted after the Bank of England hiked interest rates to curb record inflation (above 10 percent), and mortgage demand came to a screeching halt, hitting its lowest point last November since June 2020, when the housing market was at a complete standstill due to the pandemic that locked the entire world indoors. This climate of uncertainty destroys the image of London as a center of desires and interests of the most affluent, whose flight began as early as 2016, when the super-rich Chinese, Arabs, and Russians who helped swell the real estate market in the past began to leave the capital. 

According to the latest outlook on the U.K. construction sector, the inflationary surge is set to subside in the coming months, and as inflation eases and demand returns, opportunities for attractive returns on real estate investments will not be long in coming. In this, the Mecs Study Center's Ceramic Tile Market Forecast Analysis also agrees, estimating a recovery to 2026 in demand for slabs and tiles from the UK at around 5 percent per year on average. Indeed, the housing market situation is expected to stabilize by 2023 and then pick up again as early as next year, with a new flow of investment that will benefit both new construction and renovations with positive knock-on effects for all materials in the construction supply chain.