But again he feels that as those companies begin to refinance their debt, the outcome will be that a more usual cycle emerges, with higher debt costs leading to lower profits for many companies, and potentially higher unemployment.
Guy Miller, chief market strategist and head of macroeconomics at Zurich, says the housing market is very important to the UK economy.
Mortgage rates need to come down soon or a lot of people will be in trouble when they come to refinance.
"But wage growth continues to go up in the UK. People have a lot of sympathy for striking workers and think they should be paid more," Miller adds.
"That is a sign wage pressure will persist in the economy until unemployment rises, but actually, it's not really been spotted yet. Unemployment has risen in the UK to 4.5 per cent from the previous 3.5 per cent, so perhaps the impact is starting to be felt.”
Miller, who is also a member of the Global Future Councils network from the World Economic Forum, admits to being “surprised” by the resilience of the UK economy so far, and in particular the strength of consumer spending, but feels the lag effect of higher rates has yet to be felt by the consumer, and that this will soon happen.
Miller says he does not feel this is very different to the US or Eurozone economies, though he does feel the impact of Brexit will mean inflation runs higher in the UK than in peer economies as a consequence of changes to the labour market.
Cutting the cord?
Traditionally, if inflation is falling and economic conditions are deteriorating, policymakers can respond by cutting interest rates.
But Gimber, who like Miller feels inflation will persist in the UK, says the problems in the domestic economy may go beyond the short-term.
If inflation remains higher in the UK than in peer economies, the BoE may not be able to cut rates to stimulate demand, while central banks in other countries will be able to do this. And this is where the UK’s economic performance could start to diverge from that of peers.
Lyons takes the view that many of the issues that currently bedevil the UK economy are decades in the making, and linked to what he says has been underinvestment in infrastructure and other parts of the UK economy for decades.
On trend
The extent of his concern about the outlook for the UK economy can be seen in his view that while the trend rate of growth (that is, the level of growth the economy can achieve in normal times without stoking inflation) is now in the 1-1.5 per cent range, prior to the global financial crisis, the consensus view was that trend growth was in the range of 2.5 per cent.
