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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
The latest data suggests that the economy dealt well with the pre-referendum uncertainty, with GDP growth picking up from 0.4% in Q1 to 0.6% in Q2. But the quarterly expansion was entirely driven by activity in April, perhaps setting a poor base for …
3rd August 2016
July’s final Markit/CIPS headline composite PMI confirmed the steep drop reported in the flash estimate, suggesting that the Brexit vote has had a significant near-term impact on the economy. But we continue to expect a positive response from policymakers …
The package of policy options the MPC will unveil on 4th August could include rate cuts, the purchase of gilts and corporate bonds, an expansion of the Funding for Lending Scheme (FLS), forward guidance and an adjustment to its policy horizon. While we …
2nd August 2016
The July UK Markit/CIPS manufacturing survey suggests that the surge in manufacturing output in Q2 was a one-off and the vote to leave the EU has added to pressures on the sector. This supports the case for monetary easing by the MPC at its meeting on …
1st August 2016
Data released this week imply that GDP growth ground to a halt in the two months preceding the referendum. And survey indicators suggest that conditions worsened further in the weeks following the vote to leave the EU, as uncertainty took its toll. … …
29th July 2016
We think new Chancellor Philip Hammond’s fiscal policy “reset” resulting from Brexit will involve some discretionary loosening. This will come on top of automatic stabilisers which will lower receipts growth and increase welfare spending in response to …
June’s household borrowing figures highlighted that the housing market cooled further around the time of the EU referendum. But there were no signs of a more general slowdown in lending. Nonetheless, with the economic outlook having deteriorated since …
Consumer confidence fell sharply in the weeks following the referendum, led by a drop in perception of the economy’s health. However, the survey was conducted during a period of extreme political uncertainty which has since eased. … GfK/NOP Consumer …
With market participants having been disappointed by the Monetary Policy Committee’s inaction in July, expectations of a bolder and broader package of measures at next week’s meeting have grown. With recent activity data showing a slowdown underway and …
28th July 2016
July’s CBI Distributive Trades Survey paints a fairly dismal picture of the retail sector in the days following the EU referendum. However, the survey hasn’t been an especially reliable guide to the sector’s fortunes recently. … CBI Distributive Trades …
27th July 2016
Today’s UK GDP figures showed that growth held up well in Q2 despite the uncertainty created in the run-up to the referendum. But this appeared to be driven completely by growth in April – boding poorly for growth in Q3. … Preliminary estimate of GDP …
The CBI Industrial Trends Survey for July and Q3 showed that manufacturers are not immune from the Brexit-related economic slowdown. But whether their gloominess persists now that the dust has settled somewhat remains to be seen. … CBI Industrial Trends …
25th July 2016
The economy has clearly taken a hit from the vote to leave the EU last month. Granted, sales values have held up well according to John Lewis, and the latest Bank of England Agents’ Scores were surprisingly upbeat. But consumer confidence has tumbled and …
22nd July 2016
Almost a month on from the historic vote to leave the EU, some of the first indicators of the state of the economy appear to point to a marked slowdown in growth. But the prospect of policy support to come has helped financial markets to retain their …
The first economy-wide gauge of post-referendum activity suggests that the UK economy probably contracted in the weeks after the vote. But with market sentiment having improved and political uncertainty diminished, some of the downward pressure may …
The near-term outlook for the consumer recovery has weakened since the UK voted to leave the EU last month. Indeed, consumers’ confidence in the economic outlook deteriorated sharply, and the drop in the pound is set to eat into real income growth over …
21st July 2016
Government borrowing in June was well down on a year ago and retail sales showed a strong increase in Q2. But borrowing still wasn’t on track to meet the OBR’s forecast and June’s sales set a poor base for Q3. Also, the vote to leave the EU should result …
It appears likely that the Chancellor won’t ramp up austerity to offset the negative impact of Brexiton the public finances. Instead, we think he will increase borrowing further relative to previousplans by easing back on the fiscal squeeze to help …
The latest labour market figures showed that despite the referendum looming at thetime, the jobs recovery remained in fine fettle in Q2. But this shouldn’t prevent theMonetary Policy Committee from loosening policy at its August meeting. … Labour Market & …
20th July 2016
The UK’s vote to leave the European Union has plunged the country into a period of almost unprecedented uncertainty. But we remain a bit less pessimistic than some others over the economic impact. So while we have pulled down our growth forecasts, we are …
19th July 2016
June’s rise should be the start of an upward trend in inflation in the wake of sterling’s referendum-related slide. But while inflation will probably breach the 2% target in a year’s time, this shouldn’t stop the MPC from loosening policy in August. … …
The Monetary Policy Committee’s surprise decision to leave policy on hold at Thursday’s meeting appears primarily to have reflected a desire to combine its remaining policy ammunition into a potentially more powerful package of measures in August. … The …
18th July 2016
What little data we have had so far suggest that the economy has weakened following the vote to leave the EU. Although this wasn’t enough to persuade the MPC to loosen policy in July, easing is by no means off the table – we will probably only have to …
15th July 2016
The Monetary Policy Committee’s inaction today will probably delay a policy response to the UK’s vote to leave the EU by only three weeks. But with market confidence fragile, it is now vitally important that it meets expectations, and preferably exceeds …
14th July 2016
The commercial property sector has so far been the main focal point of Brexit concerns. But there are reasons to be hopeful that its problems won’t push the broader economy into a deep recession. … How big is the threat from …
13th July 2016
June’s BRC sales data – which cover the days both before and immediately after the EU referendum – show the retail sector faltering. But we will have to wait a bit longer before a clear picture of the referendum’s impact on the sector emerges. … BRC …
12th July 2016
The Bank of England’s Monetary Policy Committee (MPC) is likely to look through the inflationary consequences of the drop in the pound seen since the Brexit vote and focus instead on cushioning the impact on the economy. … How will policymakers respond to …
11th July 2016
The headlines this week have concentrated on the negative impact that Brexit has had on sterling and confidence, as well as the temporary suspension of trading in a number of commercial property funds. But support for the economy appears to be on its way, …
8th July 2016
The fall in the pound since the EU vote has been widely presented as a negative development. Not only is it being seen as a general indicator of Brexit vote fall-out, but many forecasters appear to think it will have a negative impact on the economy. …
While the latest trade figures highlighted the unbalanced nature of the recovery, GfK’s “Brexit special” consumer confidence figures provided some worrying signs that the main engine of growth may be stuttering following the referendum. … Trade (May) …
The relatively calm market reaction to the EU referendum might suggest that there is no urgency for the Monetary Policy Committee (MPC) to deliver additional policy stimulus at its policy meeting on July 14 th . But we think the Committee will recognise …
7th July 2016
The latest data survey data suggest that growth slowed further in the second quarter, ahead of the referendum. Indeed, the Markit/CIPS composite PMI ended June at a level consistent with no quarterly growth in GDP. That being said, the official data have …
The fall in industrial production in May was just a partial reversal of April’s gain, meaning that the sector should provide strong support to overall GDP growth in Q2. But the manufacturing sector’s struggles don’t appear to be over yet. … Industrial …
While the downward pressure on the pound has increased in response to some adverse post-referendum developments, we have long argued that a substantially lower exchange rate would be an important factor helping to limit the economic damage of a vote to …
6th July 2016
The Markit/CIPS services survey was thankfully not as bad as the construction survey released yesterday. But it was not that good either and suggests that the economy struggled to grow much at all in Q2. … Markit/CIPS Report on Services …
5th July 2016
