European Securitized Products: UK Credit Cards- Comparison with the US, RV, collateral, structures and performance

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European Securitized Products: UK Credit Cards- Comparison with the US, RV, collateral, structures and performance

at the data with caution. For a start, there are questions about the

reliability of some of these numbers. Seasonal adjustment issues (which we

flagged in the last GEOS) likely overstated Q1 strength. Secondly, a more

forward-looking view for the trajectory of the UK continues to hinge on

assessment of the Iran conflict which leaves forecasts sensitive to geopolitical

assessments.

n CPI continues its downward path, but still above target. CPI continued to

downside surprise in the May print. While this was led by a softening in eight out

of twelve divisions, it was offset by strong a transport component on the back

end of higher energy prices. While the MOU will help stabilise energy prices in

the medium term, the higher elevated level means we expect energy price to

grow by an average of 8-9% YoY per month for the remainder of this calendar

year. As a result, we would expect headline CPI to pick up in Q3 of this year and

to remain at broadly 3% throughout Q1 of next year, before it starts to unwind

again in the remainder of 2027.

n Political answers but fiscal questions. The prime minister’s resignation,

alongside the election of Andy Burnham to parliament, has put an end to a

prolonged period of speculation on UK politics. While the leadership election has

not yet started, it looks increasingly likely that Mr Burnham will be the only

candidate and thus we could see him in office as early as mid/late summer.

However, a new prime minister will face old challenges. In opting to adhere to

the fiscal rules and the manifesto, Mr Burnham will likely brush up against the