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While the latest Quarterly National Accounts raised further questions about the sustainability of consumer spending growth, we don’t think that a dramatic slowdown is in prospect. Household spending held up remarkably well towards the end of 2016, rising …
31st March 2017
The latest Quarterly National Accounts highlighted that the economy as a whole expanded at a solid pace at the end of last year, although at first glance it raises some questions about the sustainability of strong household spending growth. … National …
Consumer confidence appears to be holding up well, providing another reason to think that the likely slowdown in spending growth this year won’t be too severe. … GfK/NOP Consumer Confidence …
The triggering of Article 50 today is a political milestone that brings the UK one important step closer to actually leaving the EU. However, this is still an early step in what is set to be a lengthy process. Meanwhile, the notification itself is …
29th March 2017
February’s money and credit figures suggest that households’ appetite for debt has taken a bit of a hit, after holding up well following the EU referendum. But we don’t think that borrowing growth will slow too much further. … Household Borrowing Monitor …
The Monetary Policy Committee might be relieved to see the pound regaining a bit of ground in recent weeks. But it shouldn’t want the exchange rate to rise too far. … The MPC’s sterling …
28th March 2017
Over the next year, we expect the Fed to hike rates faster than markets expect while the Bank of England keeps policy on hold. If we are right, the gap between US and UK short rates will continue to widen which should increase the wedge between US …
27th March 2017
With the Government set to formally notify the EU of the UK’s wish to leave the bloc next week, some preliminary detail has emerged on how the EU will approach negotiations. It is expected to insist that a withdrawal agreement precedes any trade …
24th March 2017
CPI inflation surprised on the upside again last week, largely due to a few components that tend to be more responsive to exchange rate movements. This begs the question of whether we (and many others) are underestimating the size of the pass-through from …
With CPI inflation picking up quite quickly and nominal wage growth remaining subdued, households are already facing a squeeze on growth in their real incomes. Indeed, there are some signs that it is already contributing to a slowdown in spending growth. …
23rd March 2017
The CBI Distributive Trades Survey held its ground in March. But given that the survey remains much weaker than it was towards the tail end of last year, it still points to a significant slowdown in retail sales growth. … CBI Distributive Trades Survey …
Despite higher UK inflation and solid growth, there are good reasons why the MPC will not quickly follow the US Fed in tightening monetary policy. … Why won’t the MPC soon follow the …
The latest retail sales figures will provide some reassurance that higher inflation has not brought growth in consumer spending to a complete halt. That said, the outlook for spending this year is certainly weaker than in 2016. … Retail Sales …
The latest CBI Industrial Trends Survey illustrates that the drop in the pound continues to have some beneficial effects, with the manufacturing sector in particular appearing to have put in a good performance in the first quarter. … CBI Industrial Trends …
21st March 2017
February’s CPI figures have increased the chances of an earlier interest rate hike than markets have been expecting. Meanwhile, the fall in public borrowing was in line with the OBR’s new downwardly-revised forecasts. … Consumer Prices & Public Finances …
Political uncertainty is back on the agenda, with speculation of an early General Election and confirmation that Article 50 will be triggered on March 29th coming on top of the renewed threat of a second referendum on Scottish Independence. While these …
In the week Article 50 received Royal Assent, sterling halted its latest decline despite renewed calls for a second Scottish independence referendum. While the referendum announcement coincided with a change in fortunes for sterling, the far more …
17th March 2017
While it came as no surprise that the US Federal Reserve pressed ahead and raised interest rates last week, markets were given a jolt by an unexpected split on the UK Monetary Policy Committee, with one member voting for an immediate hike and others …
The decision by the Monetary Policy Committee to leave interest rates on hold and the scale of its asset purchases unchanged, at the same time as the US Fed tightened policy again, highlights the likely divergence in policy rates that is set to occur over …
16th March 2017
The latest labour market data show that average earnings growth is not picking up alongside inflation, resulting in a squeeze on real wage growth. However, we think that the tightness of the labour market – shown by the unemployment rate hitting a joint …
15th March 2017
While the imminent triggering of Article 50 will bring Brexit a step closer and could prompt a rise in uncertainty, there are still good reasons to expect the economy to remain resilient. … Will Article 50 trigger Brexit …
14th March 2017
Scotland’s First Minister and SNP leader Nicola Sturgeon’s announcement that she is beginning the process to enact a second referendum on Scottish independence before the UK exits the EU far from guarantees that the country will leave the rest of the UK. …
The Lords’ amendments to the Article 50 Bill are all but certain to push back the date of notification to the end of the month. Meanwhile, expectations of tighter monetary policy abroad rather than Brexit worries have been the key driver of financial …
10th March 2017
While the Spring Budget has generated a lot of political controversy, it was a fairly dull affair from a macroeconomic perspective. Even if the policy to raise National Insurance Contributions on the selfemployed is excluded from the Finance Bill, as the …
Today’s deluge of economic data as part of the ONS’ “Theme Days” suggest that the pound’s post-referendum slide is helping growth to become more balanced. … Industrial Production, Construction & Trade …
The measures announced in yesterday’s Spring Budget amounted to little and the big picture is still that fiscal austerity will weigh on households’ spending power over the next few years. Meanwhile, although retailers did not come away completely empty …
9th March 2017
It may not be long before one or two Monetary Policy Committee members vote for a rise in Bank Rate. But with signs that the economic data have taken a bit of a softer turn since February’s Inflation Report, this month’s decision to keep rates on hold and …
The Office for Budget Responsibility’s caution on both the economic and fiscal outlook limited the Chancellor’s room for manoeuvre in this last spring Budget. But he still has a little room to loosen the purse strings later this year or beyond if the …
8th March 2017
This checklist is intended to help clients keep track of the key measures and numbers announced during the Chancellor’s Budget at 12.30pm tomorrow and to provide some instant context. … UK Budget …
7th March 2017
The latest fall in the pound has reflected stronger growth overseas and falling expectations for UK inflation rather increased fears of Brexit damage. Indeed, it could help to cushion the blow of the vote to leave the EU by giving the external sector …
February’s BRC Retail Sales Monitor added to other evidence that the hit to real consumer spending growth from higher inflation is now starting to materialise. … BRC Retail Sales Monitor …
Renewed calls for a second referendum on Scottish independence, and the House of Lords’ amendments to the Article 50 Bill are stumbling blocks to Theresa May’s Brexit plans, but we doubt that either significantly reduce the chance of the notification …
3rd March 2017
Resilient consumer spending was the main reason why GDP growth held up so well in the wake of the Brexit vote. However, there have been signs that the exchange-rate induced rise in inflation is starting to hit real spending growth. Indeed, the expansion …
Companies’ margins are starting to bear the brunt of the exchange-rate induced rise in costs. And given the deterioration in consumer confidence, slower employment growth and the strong competitive environment, we suspect that retailers may not be in a …
February’s Markit/CIPS services survey adds to other evidence that suggests that the economy has lost a bit of momentum in the first quarter. And there are a number of headwinds that are likely to continue to weigh on growth this year. … Markit/CIPS …
The more rapid improvement in the public finances than anticipated in the Autumn Statement, should give the Chancellor a borrowing windfall. However, the recent strength in the economy means that there is little need to provide a near-term stimulus and we …
1st March 2017
January’s UK money and credit figures showed that mortgage approvals have continued on their upward trend, after the lull around last year’s EU referendum, and that consumers may be becoming a little more cautious about borrowing. The number of mortgages …
Despite the fall in February’s Markit/CIPS manufacturing PMI, the survey still suggests that the sector carried a decent amount of momentum into 2017. However, there are signs that price rises are starting to hurt domestic demand. … Markit/CIPS Report on …
Rising inflation appears to be starting to weigh on consumer sentiment. That said, confidence remains above its long-run average, suggesting that the expected slowdown in consumer spending growth won’t be too severe. … GfK/NOP Consumer Confidence …
28th February 2017
Once Article 50 has been triggered, one of the first things that will be discussed is the UK’s “divorce settlement” – or the degree to which the UK will cover its share of pending EU commitments and liabilities. The EU Chief Negotiator’s likely opening …
27th February 2017
There have been growing signs that some EU nationals are reacting to the vote to leave the EU by either returning to their country of citizenship or by obtaining residency rights in the UK. Meanwhile, the positive and negative effects of the Brexit vote …
24th February 2017
On the face of it, last week’s GDP figures were encouraging. After all, they indicated that the economy accelerated at the end of last year, and suggested that the post-referendum drop in the pound is starting to drive a strong performance in net exports. …
February’s CBI Distributive Trades Survey made for disappointing reading. On top of the poor official retail sales figures for the start of the year, this adds to the evidence that the hit to consumer spending growth from higher inflation is starting to …
23rd February 2017
The second estimate of Q4 GDP was a bit a mixed bag, but confirmed that the UK economy gathered momentum over the course of 2016. While the outlook remains uncertain, we think that the economy will hold up better than most expect. … GDP: Second Estimate & …
22nd February 2017
Weak public borrowing compared to the consensus forecast in January was due to a change in the way the ONS measures corporation tax receipts. Revisions to previous months actually means that borrowing is set to be well below the OBR’s forecasts. … Public …
21st February 2017
February’s CBI Industrial Trends Survey added to the evidence that the manufacturing sector is getting back onto its feet. This should help prevent GDP growth from losing too much momentum in the quarters ahead. … CBI Industrial Trends Survey …
20th February 2017
While the possibility of Parliamentary “ping-pong” suggests that a triggering of Article 50 at the EU summit on 9th & 10th March is unlikely, the Prime Minister’s self-imposed deadline of the end of March should still be met. … Brexit Watch: Parliamentary …
17th February 2017
There are growing signs that the post-referendum strength in consumer spending is beginning to fade. With CPI inflation set to pick up to around 3% by the end of this year, growth in households’ real wages is likely to slow considerably which could …
Last week’s labour market and inflation figures have fueled concerns that the impact of rising inflation on real earnings will cause a significant slowdown in consumer spending growth. Indeed, rising inflation and a fall in annual average earnings growth …
January’s surprise fall in the official measure of retail sales volumes has brought the recent run of resilient economic news to an abrupt end and suggests that the hit to consumer spending growth from higher inflation is starting to materialise. … Retail …
