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The Quarterly National Accounts showed the recovery regained a little pace at the end of 2015 but this partly contributed to growing imbalances in the economy. … National Accounts & Balance of Payments …
31st March 2016
Consumer confidence held steady in March at a level a little below last year’s average. But with confidence still high by past standards, a sharp slowdown in household spending growth is not likely to be in store. … GfK/NOP Consumer Confidence …
Despite the recent recovery in most UK markets, there is still evidence that they are bracing themselves for a possible Brexit. Accordingly, we think there is scope for markets to move significantly further when the result of the vote becomes known on …
30th March 2016
The relatively timid measures announced by the Bank of England’s Financial Policy Committee (FPC) today underlined that it is set to tread cautiously when implementing macroprudential policy. Accordingly, we doubt that the FPC’s actions will knock the …
29th March 2016
The Financial Policy Committee (FPC) had a lot on its plate at last week’s meeting, with concerns about the impact of a Brexit only adding to the long list of existing risks to financial stability. Even if the FPC chooses to stand pat again at this …
24th March 2016
The consumer recovery is still going strong, with household spending the driving force of the overall economic recovery. Although the retail sales figures have been a bit volatile recently, the underlying trend still looks robust. That said, price …
We doubt that February’s dip in retail sales is the beginning of a more pronounced slowdown in the pace of the consumer recovery. What’s more, while there are some headwinds to spending growth, the outlook remains fairly bright . … Retail Sales …
By promising no further welfare cuts, the Government has ruled out yet another way of raising some money should it need to. This suggests that the Conservatives will struggle to meet their strict fiscal rules if the OBR’s forecasts deteriorate further or …
23rd March 2016
Online sales growth – while still very strong – has been slowing over recent years. However, we think the big slowdown in growth should be behind us, with innovations in mobile technology and internet shopping providing plenty of scope for further growth. …
This Thursday marks the date that the Scottish government had pencilled in for “independence day” if Scotland had voted to leave the UK in 2014’s independence referendum. So it seems a particularly apt time to revisit the Scottish question, which is …
22nd March 2016
February’s disappointing public finances figures were yet another blow for the Chancellor by suggesting the OBR’s new forecasts published in last week’s Budget already look too optimstic . Meanwhile, the unchanged inflation rate of 0.3% in February …
Despite some improvement, March’s CBI Industrial Trends Survey indicates that the manufacturing sector recovery remains sluggish, although there are some reasons for optimism further ahead. … CBI Industrial Trends Survey …
21st March 2016
Large parts of the Budget were clearly aimed solely at repairing the damage that the OBR’s new economic forecasts did to the Chancellor’s chances of meeting his fiscal target. That said, there is clearly a big question mark over whether Mr Osborne really …
18th March 2016
February’s consumer prices figures should show inflation creeping further above the zero rates seen for most of last year. Although the risk of a relapse cannot be entirely ruled out – if, for example, the economy deteriorates a lot further – it now …
The OBR’s decision to cut its productivity growth forecasts left the Chancellor scrambling to find some money to achieve his 2019/20 surplus goal. But we think that productivity growth will be much stronger than the OBR expects, giving the Chancellor an …
While the measures announced at yesterday’s Budget amounted to a small net giveaway to consumers, the bigger picture is that a significant fiscal squeeze still lies ahead. And although retailers did not come away empty handed, the measures will have …
17th March 2016
The MPC’s decision to leave interest rates on hold at 0.5% today – marking the 7th anniversary of rates being at this record low – was unsurprising given the softness of recent activity indicators and heightened uncertainty about the economic outlook. The …
Whether the chancellor meets his objective of eliminating the budget deficit by the end of this parliament depends upon how well the economy performs. Because we are more optimistic than the OBR about growth, we think his chances are reasonable. …
16th March 2016
With the Chancellor setting the backdrop to this afternoon’s Budget as one where the global “storm clouds” are gathering, today’s labour market figures offer a ray of sunshine. However, wage growth is still fairly subdued by past standards, which will …
While we think the UK will do well either inside or outside the EU in the long run, there is potential for a short-term hit to investment in particular. But we don’t think that this would derail the recovery. … UK Budget 2016 …
15th March 2016
Concerns about the strength of the global economy have eased over the past month, boosting market sentiment. This comes despite ongoing worries about the upcoming EU referendum and domestic activity indicators, such as February’s Markit/CIPS PMI, …
The possibility of a Brexit has raised a number of worries for British retailers, including the prospect of falling consumer demand and rising imported goods costs. But while the short-term impact of a decision to leave the EU might be negative for …
14th March 2016
The two main events this week – the Budget and MPC decision – will highlight the divergence between monetary and fiscal policy stances. With Bank Rate likely to be held at 0.5%, marking seven full years at a record low, monetary policy is doing a great …
11th March 2016
With recent survey evidence suggesting the economic recovery has lost some pace at the start of the year, today’s trade figures suggest that growth was worryingly unbalanced too. … Trade …
Recent developments are unlikely to have caused Monetary Policy Committee (MPC) members to fundamentally change their view since they voted unanimously to leave rates on hold in February. Indeed, there is nothing in the data that should push the more …
10th March 2016
For all the hopes of a rebalancing towards exports, the UK’s trade deficit with the rest of the world has barely narrowed since the financial crisis. Our analysis suggests that a chronic lack of demand in the euro-zone is primarily to blame for Britain’s …
News that a number of retailers are seeking to shrink their workforce this year suggests that the jobs recovery that only really got underway in late-2013 may be over already. What’s more, the BRC has issued a dire warning, predicting that there could …
With the Chancellor constrained by both the public finances and a desire not to rock the boat ahead of the EU referendum, this Budget is unlikely to be a radical affair. Any changes to the borrowing forecasts certainly won’t be as favourable as in …
9th March 2016
After experiencing the largest monthly fall in three years in December, UK industrial production started 2016 on a somewhat more positive note. However, external factors suggest there won’t be much further improvement in the near term. … Industrial …
After a surprisingly-strong start to the year, February’s BRC sales figures showed retail sales growth moderating. With temporary supports set to fade, 2016 looks likely to be a solid, rather than spectacular, year for consumers. … BRC Retail Sales …
8th March 2016
While we think the UK will do well either inside or outside the EU in the long run , there is potential for a short-term hit to investment in particular. But we don’t think that this would derail the recovery. … Investment would bear the immediate …
7th March 2016
Capital Economics does not have a strong axe to grind either way on the EU question. But we do feel that many of the arguments put forward on both sides are exaggerated – including those from the Government last week. We may soon get a brief respite …
4th March 2016
Global growth worries and uncertainty surrounding the upcoming Brexit referendum seems to have finally dented UK activity. Indeed, all three Markit/CIPS surveys fell in January. The composite PMI now points to quarterly GDP growth of only around 0.3% …
3rd March 2016
This report is only available as a PDF. Click to download. … Markit/CIPS Report on Services (Feb.) …
Although we think that the UK will do well in the long run whether inside or outside of the EU, there is clearly potential for a disruptive short-term impact from the uncertainty that would be seen immediately after a “leave” vote. But we doubt that …
2nd March 2016
One of the advantages of a vote to leave the EU would be the savings the UK could potentially make on its EU contributions. This money could in theory be used to give a boost to the economy, but there are reasons why this might not happen in practice. … …
1st March 2016
The February UK Markit/CIPS manufacturing survey showed that the sector doesn’t appear to be doing any better so far in 2016 than it did in 2015. But the manufacturing sector’s prospects should improve slightly as the year progresses. … Markit/CIPS …
January’s household borrowing figures will only have added to mounting concerns regarding rapid unsecured credit growth and the sustainability of the consumer recovery. However, at this stage we do not consider the current expansion of consumer credit a …
29th February 2016
Brexit unsurprisingly dominated the news again last week, especially its continued downward impact on sterling. As the referendum nears, we expect to see further falls in the pound. However, this should not be viewed as an entirely negative development, …
26th February 2016
February’s consumer confidence figures show that consumers are becoming increasingly concerned about general economic uncertainty. However, they remain upbeat by past standards, and this should help household spending to keep growing at a solid rate in …
The labour market has been rapidly tightening, but there are reasons to think that this won’t feed into a surge in wage growth soon. Indeed, we think there is at least some slack left in the labour market. Even if we are wrong, we are optimistic that …
25th February 2016
With GDP still estimated to have risen by a quarterly 0.5% in Q4 of last year, the UK recovery is still looking solid, but unspectacular. A number of clouds loom on the horizon, but we don’t think that a sharp slowdown is in store. … GDP: Second …
Following the strong official retail sales figures in January, February’s CBI Distributive Trades Survey proved very disappointing reading. But we remain upbeat about the near-term prospects for high-street spending. … CBI Distributive Trades Survey …
24th February 2016
2015 was a good year for the consumer recovery and 2016 looks like it started off on a good footing, with strong retail spending and car registrations in January. The picture for spending in the near term looks positive, with the direct impact of energy …
23rd February 2016
Sterling remains the main casualty of Brexit uncertainty and we expect the pound to fall further as the referendum nears. However, this should not be viewed as an entirely negative development, as the much longed-for rebalancing of the economy probably …
The deal which looks likely to be sewn up at this week’s EU Council meeting should pave the way for David Cameron to announce a date for the EU referendum soon and officially launch his campaign to remain in a “reformed EU”. However, we doubt the deal …
19th February 2016
One of the main areas of concern in markets in recent weeks has been the banking sector, both in the UK and overseas. However, we do not think that this pessimism about the UK’s banking sector is justified. For a start, we have pointed out before that UK …
The Chancellor will welcome today’s better news on the public finances, ahead of the Budget next month, while January’s retail sales figures suggest that the consumer recovery remains in full swing. … Public Finances & Retail Sales …
While most developments since November’s Autumn Statement bode poorly for the public finances, lower interest rates should provide an offset. However, the Chancellor would be unwise to spend this windfall as this impact could easily be reversed in …
18th February 2016
