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Brexit Secretary David Davis’ comments this week that enacting Brexit is more challenging than putting a man on the moon were underlined by a number of key votes in the House of Commons as well as the release of a fresh batch of EU “position papers” on …
30th June 2017
Amidst the rather confusing signals given by Bank of England Governor Mark Carney and colleagues in recent weeks, one message to become clearer is an apparent increased focus on the question of whether stronger business investment can compensate for …
While the latest Quarterly National Accounts has raised further questions about the sustainability of consumer spending growth, we don’t think that a dramatic slowdown is in prospect. … Consumer spending reliant on saving …
While Q1’s National Accounts confirmed that quarterly GDP growth slowed sharply at the start of 2017, there are signs that growth has re-accelerated. … National Accounts & Balance of Payments …
The latest consumer confidence survey suggests that the squeeze on real earnings is starting to weigh on sentiment. However, this shouldn’t prevent consumer spending growth from holding up relatively well in the near term. … GfK/NOP Consumer Confidence …
May’s household borrowing figures provide another reason to think that consumer spending growth may have picked up pace in Q2, after a disappointing performance in Q1. But the figures will clearly add to concerns about household debt. … Household …
29th June 2017
The publication today of the Financial Stability Report revealed that while the Bank of England’s Financial Policy Committee is fairly sanguine about the resilience of the financial system as a whole, it is keen to tighten lending standards for unsecured …
27th June 2017
June’s CBI Distributive Trades Survey provided further reason to think that consumer spending growth re-accelerated in Q2, after a pretty poor performance in Q1. … CBI Distributive Trades Survey …
Our upbeat view on the outlook for the UK economy might suggest we would expect the FTSE 100 to record significant further gains this year and next. But even if the economy remains resilient, there are at least four reasons to think that the index will …
23rd June 2017
At the one year anniversary of the UK’s historic vote to leave the EU, the Brexit process is still firmly in its infancy. Although face-to-face negotiations with the EU finally began this week, the Queen’s Speech highlighted the legislative challenge that …
After a surprisingly large split in the vote at June’s Monetary Policy Committee meeting, two speeches this week provided further signs of a growing rift on the Committee. Indeed, the fact that Andy Haldane – Bank of England Chief Economist – appears to …
Manufacturers’ overwhelmingly positive response to June’s CBI Industrial Trends Survey adds to other evidence suggesting that the slowdown in manufacturing output shown in the hard data will prove temporary. … CBI Industrial Trends Survey …
22nd June 2017
May’s figures suggest that the public sector finances have made a solid start to the fiscal year, although we doubt that this will continue for too much longer. And fiscal policy is still set to provide a significant drag on GDP growth in the coming …
21st June 2017
Consumers still appear confident enough to borrow in order to sustain spending growth in the face of higher inflation. But how worried should we be that higher household borrowing and debt will ultimately prompt a steep drop in spending or riskier lending …
20th June 2017
With face-to-face talks with the EU set to begin next week, it is still unclear whether or not the General Election result – which clearly weakened Theresa May’s negotiating mandate – will lead to a softening in the Government’s Brexit stance. … Brexit …
16th June 2017
This week, the Bank of England’s Monetary Policy Committee came close to voting to tighten monetary policy. At the same time, we saw claims that austerity is now over. It is remarkable therefore that markets still think the MPC will leave rates on hold …
The squeeze in real wages looks likely to intensify as as inflation continues to rise to above 3%. However, nominal spending should continue to hold up well, supported by strong employment growth, resilient consumer confidence and low borrowing costs. In …
15th June 2017
While an interest rate hike in the UK within the next few months still looks unlikely, the hawkish tone of June’s Monetary Policy Committee (MPC) policy decision and minutes supports our view that rates will rise rather sooner than markets expect. … MPC …
May’s retail sales figures show that recent rises in inflation continue to weigh on the growth in sales volumes. However, the strength of sales values suggests that, when the impact of the fall in the pound fades, volumes growth should accelerate. … …
While the general election result may prompt the Government to slow down the planned pace of fiscal tightening a bit, it would be wrong to conclude that austerity’s days are numbered. … Is austerity …
14th June 2017
Despite the significant recent erosion of slack in the labour market, wage growth has failed to keep up with inflation and will weigh on consumer spending this year. … Labour Market …
It has been suggested that Prime Minister Theresa May’s failure to gain an overall majority in last week’s General Election means that that a much softer Brexit could be back on the table. However, while some softening may now be in prospect, such a big …
13th June 2017
After rising unexpectedly in May, we think that CPI inflation is now not far away from its peak. Indeed, the effects of the lower pound already appear to be fading at the start of the production pipeline. … Consumer Prices & Producer Prices …
There are reasons why the political uncertainty triggered by the hung Parliament result won’t weigh too heavily on GDP growth. After all, the UK economy has proved resilient to recent bouts of political uncertainty and, so far, there are few signs of a …
9th June 2017
With the General Election resulting in a hung parliament, there is a lot of uncertainty about the outlook for demand, Brexit and policy. As a result, the MPC is even more likely to sit firmly on its hands than before the election at next week’s meeting …
Although all eyes this morning have been on the General Election result, a flurry of UK activity data has also been released, which has cast some doubt on the likely strength of the bounce-back in overall activity growth in Q2. … Industrial Production, …
The Hung Parliament resulting from the General Election on balance probably increases the chances of a “softer” form of Brexit, although remaining in the single market indefinitely does not appear to be on the table. Moreover, there is still a risk of a …
With no party gaining a majority in the General Election, the UK looks set to face a period of uncertainty about the outlook for policy, Brexit and the possibility of another election. It is still very early days, but here we address some initial …
Our Election Preview , published 1st June, contains our detailed analysis of the potential impact of the election. This UK Economics Update focuses on the results process and short-term implications of the possible outcomes. … A guide to election …
8th June 2017
Despite the weakness in May’s BRC Retail Sales Monitor, growth in consumer spending on retail goods still looks set to rebound in Q2. Nonetheless, the squeeze on households’ real incomes is likely to weigh on spending over the course of 2017. … BRC Retail …
6th June 2017
While the downward revision to the ONS’ estimate of Q1 GDP growth from 0.3% to just 0.2% was a disappointment, the business surveys still suggest that a pick-up in growth in Q2 is on the cards. Admittedly, the Markit/CIPS all-sector PMI, which is a …
May’s Markit/CIPS report on services still implies that GDP growth has accelerated after the sharp slowdown experienced in Q1. And the forward-looking balances suggest that this pace can be maintained in the coming months. … Markit/CIPS Services PMI …
5th June 2017
With less than a week to go until the General Election on 8th June, the polls have continued to narrow and the outcome is less certain than it seemed a few weeks ago. In this special edition of Brexit Watch, we take a look at what various election …
2nd June 2017
Despite the recent narrowing in the opinion polls, markets still seem to be banking on a sizeable Conservative majority in Thursday’s General Election. Any different outcome could therefore have a sizeable market impact. What’s more, clear differences in …
With major differences between the main parties both on Brexit and the stance and mix of fiscal policy, the outcome of the general election on June 8th could have a rather greater impact on the economy than the last few elections have done. … Election …
1st June 2017
May’s Markit/CIPS manufacturing PMI suggests that growth in the sector has reaccelerated in Q2, following the slowdown in Q1. And there are signs that this rate of growth will be maintained in the subsequent months. … Markit/CIPS Report on Manuf. …
April’s household borrowing figures provide another reason to think that consumer spending may have picked up pace in Q2, after a disappointing performance in Q1. But they will probably add to concerns about household debt. … Household Borrowing Monitor …
31st May 2017
The resilience of consumer confidence supports our view that household spending will still grow at a decent pace this year despite the squeeze on real income growth. … GfK/NOP Consumer Confidence …
The significant narrowing in the Conservatives’ poll lead over Labour has raised the risk of a more fractious Brexit. Meanwhile, comments from the ECB saw the debate over the extent to which UK financial services will be damaged by Brexit resurface. … …
26th May 2017
April’s business surveys provide hope that GDP growth will rebound in Q2 from the sharp slowdown in Q1 confirmed in this week’s official figures. Indeed, the Markit/CIPS PMI is now consistent with quarterly growth of 0.5% or so. But given that the surveys …
While the pound could fall again if the economy weakens or Brexit prospects worsen, there are good reasons to think that its recent appreciation can continue. … Sterling’s Brexit recovery can go …
25th May 2017
The second estimate of Q1 GDP presented a slightly weaker picture of the economy’s recent performance than previous numbers had suggested. But growth is likely to pick back up in the quarters ahead. … GDP: Second Estimate & Expenditure Breakdown …
Despite the weak tone of May’s CBI Distributive Trades Survey, growth in retail spending is still likely to put in a better performance in the second quarter. … CBI Distributive Trades Survey …
23rd May 2017
April’s public sector finances set the scene for a rise in borrowing for the 2017-18 fiscal year as a whole. However, the increase in borrowing should be temporary and fiscal policy is still set to drag on GDP growth for a number of years. … Public …
The release of the Conservative Party and Labour Party manifestos this week exposed some differences in their stances towards Brexit. However, the broad contours of each party’s desired Brexit outcome are not as different as they may initially seem. … …
19th May 2017
The release of party manifestos this week highlighted that, unlike in recent elections, the two main parties offer voters a real fiscal choice this time. Labour would borrow significantly more than the Conservatives over the next five years to invest in …
The strong tone of May’s CBI Industrial Trends Survey comes on top of April’s overwhelmingly-upbeat Markit/CIPS manufacturing survey and provides another reason to be optimistic that the economy has regained some pace in Q2. … CBI Industrial Trends Survey …
With CPI inflation set to reach just over 3% later this year and pay growth still subdued, the squeeze on real earnings growth should intensify as the year progresses. But the news that spending on the high street rebounded in April after the poor start …
18th May 2017
April’s retail sales figures will help to allay concerns that real consumer spending growth is slowing sharply in the face of higher inflation and provide another reason to be optimistic that GDP growth may pick back up in Q2. … Retail Sales …
The FTSE 100’s near 20% rise since the EU referendum has endorsed our view that the economic effects of Brexit will be less damaging than many had feared. But there are reasons why the rally might struggle to go much further. … When will the FTSE’s Brexit …
17th May 2017
