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While the Bank of England’s Term Funding Scheme (TFS) – which started this week – should prevent a sharp slowdown in bank lending ahead, it is unlikely to provide a meaningful boost. Indeed, while the supply of credit may hold up, weaker demand is likely …
22nd September 2016
According to today’s CBI Industrial Trends Survey, there are few signs that the Brexit vote has knocked manufacturing activity off course in Q3. … CBI Industrial Trends Survey …
The improvement in the public finances in August is unlikely to continue as the post-referendum economic slowdown begins to bite and Chancellor Hammond probably eases the fiscal squeeze in the Autumn Statement. … Public Finances …
21st September 2016
The Prime Minister’s rejection of a points-based migration system (PBS) has left several alternatives which may have more beneficial economic effects. In reality though, the UK’s migration policy decision will be largely determined by the negotiations …
19th September 2016
This week’s informal summit in Bratislava is unlikely to be a turning point in the Brexit saga, but itwill highlight how the UK’s vote to leave the bloc is likely to force faster change within the EU itself. Meanwhile, there has been another wave of …
16th September 2016
The extent of any post-referendum slowdown in consumer spending will hinge crucially on developments in the labour market. While last week’s labour market figures showed little sign of a Brexit impact, conditions may not be quite as rosy as they seem …
Consumer spending growth should slow in the coming few quarters as a result of a number of headwinds. Indeed, we expect the Brexit vote to cause some firms to put a halt on hiring decisions, slowing employment growth. This should result in a rise in …
15th September 2016
While the Monetary Policy Committee’s (MPC) decision to leave interest rates and the scale of its asset purchases unchanged this month came as no surprise after recent upbeat economic data and the relative stability in markets, we still expect another …
Despite August’s small dip in retail sales, the continued strong trend in spending adds to other evidence suggesting that UK consumers have largely shrugged off the vote for Brexit. … Retail Sales …
Given the lags involved, it’s not particularly surprising that the latest data showed that labour market activity has yet to suffer from the apparent post-referendum slowdown in economic growth. … Labour Market …
14th September 2016
August’s stable CPI inflation rate is a temporary pause in an upward trend that should see it rise above the MPC’s target next year. But prospect of above-target inflation probably won’t stop the Committee from easing monetary policy further. … Consumer …
13th September 2016
This week’s data provided further support for our view that the near-term hit to the economy won’t be as severe as many of the pessimistic pre-referendum forecasts. Indeed, while the economy has clearly slowed after the vote, the probability of a …
9th September 2016
The resilience of the recent data has prompted some commentators to question whether the MPC was wrong to cut Bank Rate to 0.25% and announce new gilt purchases of £60bn and corporate bond purchases of £10bn in August. But monetary policy loosening was …
The latest post-referendum official figures indicated that the construction sector held up better than expected in July, and the trade deficit narrowed, continuing the recent trend of relatively upbeat economic data. … Trade & Construction Output …
The rebound in some activity data over the past month has led some to question whether the MPC jumped the gun with its bold package of measures in August. However, the loosening was no doubt one of the factors contributing towards the improvement in …
8th September 2016
Today’s industrial production figures confirmed the previous survey evidence that the leave vote has had an initial adverse impact on the sector in July. But the surveys point to a rebound in manufacturing activity in August. … Industrial Production …
7th September 2016
August’s BRC Retail Sales Monitor points to a large dip in official retail sales growth. But the survey hasn’t been an especially good guide of retail sales recently. … BRC Retail Sales Monitor …
6th September 2016
At first glance, the economy appears to have brushed off the EU referendum. The economy was performing well prior to the vote, with GDP and employment growth both accelerating in Q2. Meanwhile, households appear to be coping well after the referendum, …
5th September 2016
August’s Markit/CIPS services PMI confirmed that the collapse seen in July was a temporary reaction to the shock of the vote to leave the EU. But we doubt this will prevent the MPC from easing monetary policy further in November. … Markit/CIPS Report of …
While this week’s data still clearly point to a slowdown in the economy following the leave vote, they also suggest that conditions improved in August following the immediate post-referendum shock, and that pre-vote forecasts of a deep recession are …
2nd September 2016
While there are already signs of the inflationary impact of the fall in sterling starting to make its way through the supply chain, the drop appears to be providing some support to the economy. Indeed, manufacturing export orders have reached multi-year …
The Markit/CIPS manufacturing PMI for August confirmed out suspicions that the sharp drop in July was an overreaction and adds to other survey evidence suggesting that the economy is getting over the initial Brexit shock. … Markit/CIPS Report on Manuf. …
1st September 2016
Spending on the high street has remained resilient in the few months after the referendum. But one area of spending where Brexit uncertainty may already be taking its toll is car sales. The 72,727 private new cars registered in July was a 6.1% fall on a …
Consumer confidence recovered a little in August in another sign that consumers haven’t been too unsettled by the leave vote. … GfK/NOP Consumer Confidence …
31st August 2016
July’s household borrowing figures highlighted that the housing market continued to cool following the EU referendum and there were signs that consumers’ appetite for debt took a bit of a hit as well. What’s more, with the economic outlook having …
30th August 2016
Data released this week provide further evidence that growth is slowing following the vote to leave the EU. However, they generally don’t point to an outright contraction in activity either, adding weight to our view that the economy will avoid a deep …
26th August 2016
It has been two months since the UK voted to leave the EU and you could be forgiven for being puzzled by the recent data on the economy. After all, different sets of figures released have given markedly different signals on the health of the economy …
Households and firms shrugged off pre-referendum uncertainty, driving an acceleration in GDP growth in the second quarter. But growth looks set to slow significantly as the vote to leave the EU takes its toll, especially on investment. … GDP: Second …
Despite a fall in corporate bond yields since the referendum, we still expect business investment to be the largest near-term casualty of the vote to leave. Indeed, the fall in the pound will increase the cost of capital goods with imported components. …
While early post-referendum indicators of consumer spending have been fairly upbeat, spending growth is still set to slow following the vote to leave the EU. Labour market conditions are likely to deteriorate and rising inflation will undermine real wage …
25th August 2016
Despite the improvement in todays’ CBI Distributive Trades Survey, the figures still point to a slowdown in the official measure of retail sales growth after July’s strength. … CBI Distributive Trades Survey (Aug. & …
The relatively upbeat tone of August’s CBI Industrial Trends Survey gives us another reason to be tentatively optimistic about the extent to which the economy has taken a hit from the referendum outcome. … CBI Industrial Trends Survey …
23rd August 2016
On the face of it, last week’s labour market figures provided some further welcome signs that the immediate impact of the Brexit vote on the economy might not be quite as bad as many had feared. The jobs recovery was holding up well in the run up to the …
19th August 2016
The first raft of official data covering the post-referendum period, released this week, was surprisingly upbeat in the main. Overall, the data add weight to our view that while the economy is set to slow in the coming quarters, it should avoid a deep …
July’s public finances figures gave us the first indication of how the vote to leave the EU will slow progress in reducing the deficit over the coming years. But the new Chancellor shouldn’t lose much sleep over this as an easing of the fiscal squeeze …
The UK’s vote to leave the EU means that consumer spending growth is set to slow on the back of a weakening jobs market and a squeeze on real wage growth. Confidence has already fallen since the vote too. Nonetheless, we don’t think that a collapse is on …
18th August 2016
July’s official retail sales figures suggest that consumers haven’t been ruffled by the leave vote. While we would be cautious about reading too much into one month’s figures, this provides a tentative sign that consumer spending will prevent GDP growth …
Today’s data showed that the labour market was strong prior to the referendum and the leave vote doesn’t appear to have caused any immediate damage. But the solid figures shouldn’t stop the MPC from following through with more monetary easing. … Labour …
17th August 2016
CPI inflation continued on its upward path in July and looks set to breach the 2% target in the first half of next year, as sterling’s fall pushes consumer prices up. … Consumer Prices & Producer Prices …
16th August 2016
This week’s data provided more evidence that business investment and the property market will be hit hard by the leave vote. But with signs of resilience in consumer spending, and the Bank of England’s monetary stimulus already having some effect, we …
12th August 2016
Last week’s figures suggested that households haven’t been ruffled much by the leave vote. Admittedly, we are wary about reading too much into these relatively upbeat figures. Temporary factors such as July’s good weather were reported to have boosted …
While some of the forces recently putting strong downward pressure on gilt yields may ease a bit in the coming months, the prospect of a further prolonged period of ultra-loose monetary policy suggests that very low yields are here to stay for some time …
11th August 2016
While the uncertainty generated by the EU referendum result clearly means that business investment is likely to fall in the near term, the Bank of England’s corporate bond buying scheme should help to cushion the blow at least a little by lowering firms’ …
10th August 2016
The prospect – and subsequent delivery – of monetary policy stimulus from the Bank of England in August has helped UK assets to continue their recovery from the shock of the vote to leave the EU. Admittedly, expectations that interest rates will stay …
9th August 2016
The sharp deterioration in July’s Markit/CIPS PMIs have highlighted the danger of a deep recession in the wake of the referendum vote. While it would be unwise to dismiss this warning, there are some reasons to think that the implied scale of the …
June’s figures on industrial production and trade were fairly disappointing, suggesting that April’s strong manufacturing growth was not sustained and net trade will probably provide little support to GDP growth in Q2. … Industrial Production & Trade …
July’s BRC sales data show no sign of a slowdown in household spending following the EU referendum. But some other measures have been less positive, and we will have to wait until next week for the first official post-vote sales data, so it’s too soon to …
The MPC’s decision to announce a package of stimulus measures yesterday was no doubt influenced by the thoroughly downbeat tone of this week’s survey data. While it’s clear that growth is set to slow, policy stimulus should help the economy do better than …
5th August 2016
While the bigger-than-expected package of measures announced by the Monetary Policy Committee (MPC) at its August policy meeting is likely to have at least some beneficial effects on the UK economy, it seems likely that more support will be needed. … Will …
The Bank of England’s Monetary Policy Committee (MPC) today made good on its pledge at July’s meeting to implement a package of policy measures to cushion the economy from the adverse effects of the Brexit vote and held the door wide open to further …
4th August 2016
