Exhibit 43: Japan Consumer Prices seem mutually exclusive and likely to engender a Core inflation and inflation expectations remain low. politically charged negotiation process. This road oR Yay is made all the more dangerous by the fact that 3.0) —————Core Infation* UK authorities will have little room to cushion a Ce <i iieaer root Infetion Sher Follwing Iveas" downturn given today’s large fiscal deficits and already highly accommodative central bank. 20 Of course, a softer stance on the issues is also a 15 | pod SR possible path, one that could elongate the effective — : SNe transitional period beyond two years and lead to a je rae “- 03 far more benign outcome for the UK. °° 7 The uncertainty around the government’s 0.0 ne ultimate choices significantly increases the range of as a4 GDP outcomes in the medium term. Our current | base case assumes GDP will expand by 0.5-1.5% oom a2 2013 nol outs one in 2017. This notable slowdown from last year’s 2% pace reflects the likelihood that both hiring Data through November 2016. ; 2 f 3 i Source: Investment Strategy Group, Datastream, QUICK Bond Investors Survey. and investment activity will become more cautious ve Bocedon tne QuICk Bond instore Survey once the Brexit negotiations start. Even worse, this slowdown arrives just as consumer price inflation is accelerating from past sterling depreciation, United Kingdom: A Fork in the Road creating a lower growth/higher inflation backdrop that is set to erode real income growth. For these Much like the Eurozone, the UK economy is reasons, the risks to our central case are skewed to notable for its resilience, evident in 15 consecutive — the downside. quarters of positive quarterly growth averaging That said, the fate of the UK economy is not 2.5% annualized. This streak is even more preordained, even after the government chooses impressive considering last year’s Brexit vote and its path. As with any other negotiation, the result the resulting consensus view that the UK was