UK's economy in 2016 is likely to see a decent growth at 2%, down from an estimated 2.2% in 2015 and 2.9% in 2014, supported by growth in consumer spending. However as real income gains slow on the back of gradually rising inflation, we could see some slowdown in consumer spending in the second half of the year.

Meanwhile, fiscal tightening will also remain a drag on growth, despite the smoother path of deficit reduction in the Autumn Statement. With headline inflation close to zero and lack of wage inflation, the timing of the first Bank of England (BoE) rate hike has been pushed back persistently in recent years.

We expect both to become more favourable over the coming year, helping to pave the way towards the first BoE rate hike and a gradual pace of monetary tightening thereafter. However, Brexit referendum is one main risk. It will likely generate significant uncertainty and weigh on business sentiment and investment in the run-up to the likely summer vote.

"We believe that the first BoE hike will arrive in the second quarter of 2016 - sooner than the markets' current assumption of end-2016/early 2017." said Scotiabank in a research note