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September’s trade and industrial production figures provide further signs that the UK’s economic recovery remained unbalanced in the third quarter. … Industrial Production & Trade …
6th November 2015
The recent return to deflation is boosting consumers’ spending power. Real household spending still looks set to grow by about 3% this year, the strongest rate for a decade. … Boosts to spending to fade next …
The “Super Thursday” announcements from the MPC were on the whole quite dovish, with the Committee signaling that it is still in no hurry to raise interest rates. We remain comfortable with our view that rates will not rise until Q2 of next year. … MPC …
5th November 2015
Spending on cars has been cruising along nicely. But we doubt it will provide as much of a boost to consumer spending in coming years, particularly as temporary sources of support, such as pent-up demand and payment protection insurance (PPI) repayments …
The latest business surveys support our view that the slowdown in the economy in Q3 was just temporary. Gains in both the Markit/CIPS manufacturing and service sector PMIs in October left the economy-wide composite PMI looking consistent with quarterly …
4th November 2015
The slight bounce-back in the Markit/CIPS services survey in October brought moree vidence of what we expect will be a rebound in growth in Q4, after the slowdown in Q3. … Markit/CIPS Report on Services …
The improvement in the Markit/CIPS manufacturing survey in October suggests that output in the manufacturing sector has regained some vigour going into the final quarter of 2015. … Markit/CIPS Report on Manuf. …
2nd November 2015
Mr Osborne has various options to soften the impact of his cuts in tax credits, but all of them will cost him some money. Admittedly, this might “only” be a couple of billion for a couple of years. But it does not come at a helpful time, given that …
30th October 2015
On the face of it, the dip in October’s GfK consumer confidence survey suggests that the consumer recovery may be running out of steam. But with the headline balance high by past standards and consumer fundamentals still strong, we remain optimistic that …
Although the October CBI Distributive Trades Survey indicated a substantial slowdown in retail spending growth compared to September, we do not take it as a sign that the consumer recovery is headed for a slowdown in Q4 and beyond. In fact, the …
29th October 2015
Growth in household borrowing strengthened in September, supporting the ongoing recovery. And although mortgage approvals fell back, we believe this is a temporary blip with fundamentals still supportive of growth going forward. … Household Borrowing …
We expect mixed messages from this month’s Inflation Report. On the one hand, a lower profile for inflation over the next few months is likely to confirm that interest rates will not rise until well into next year. But on the other hand, the MPC will …
The preliminary estimate of GDP confirmed that the economic recovery cooled in the third quarter. We think that this will be only temporary. Nonetheless, the news clearly further reduces the chances of an interest rate rise in the near future. … …
27th October 2015
The CBI Industrial Trends Survey for October and Q4 highlighted the woes of the manufacturing sector. And the near-term prospects remain dim. … CBI Industrial Trends Survey (Oct. & …
26th October 2015
Although he said that it would be “a bit of a yawner”, Bank of England Governor Mark Carney’s speech on the UK’s membership of the EU contained something for both the pro- and anti-Europe camps to seize upon (with arguably more for the pros). Mr Carney’s …
23rd October 2015
The latest consumer prices figures showed that CPI inflation turned negative again in September. Although the current period of negative inflation should prove to be short lived and shallow, inflation looks set to hover around zero for most of the rest of …
22nd October 2015
Following a feeble performance in previous months, the renewed vigour in the pace of UK retail spending in September might help to stop overall GDP growth slowing too much in Q3. … Retail Sales …
September’s UK public finance figures suggested that the downward trend in borrowing is back on track after a brief wobble last month. Admittedly, it might still be a struggle to meet the OBR’s forecast for this year. But looking ahead, our forecasts for …
21st October 2015
Chancellor George Osborne was last week able to pass his new “fiscal charter”, forcing current and future governments to run a budget surplus during “normal times”. But the Chancellor may come to regret tying his hands and it dashes hopes that he may …
16th October 2015
Beneath the surface, it is clear that the economic recovery has not been firing on all cylinders recently. And the recovery faces a number of headwinds over the next year or so – in particular the re-intensification of the fiscal squeeze and a referendum …
The latest labour market statistics confirmed that the jobs recovery is back on track after the dip in employment in the spring. Meanwhile, the easing in pay growth has further reduced the case for a rate hike. … Labour market data …
14th October 2015
Deflation returned to the UK in September. Although it is likely to be another very brief and shallow affair, this clearly puts the MPC under even less pressure than before to raise interest rates. … Consumer Prices & Producer Prices …
13th October 2015
Although the strength of September’s BRC Retail Sales Monitor reflects some temporary factors, the underlying picture is good too. Robust earnings growth and high confidence should ensure the recovery in consumer spending remains strong. … BRC Retail …
It is likely that CPI inflation turned negative in September, and should remain close to zero for most of the rest of this year. However, as weak price pressures are being driven largely by lower energy prices rather than domestic economic weakness, …
9th October 2015
A raft of gloomy survey data has fuelled fears that the UK’s economic recovery is running out of steam. There are some indications that quarterly GDP growth will moderate from 0.7% in Q2 to 0.5% or so in Q3 – a fairly respectable figure, but certainly not …
August’s trade and construction figures provided further signs that the UK’s economic recovery lost some pace in Q3, and remained unbalanced. However, we remain confident that the recovery will regain some momentum soon. … Trade & Construction Output …
The MPC’s decision to keep interest rates unchanged at 0.5% this month would have been an easy one given the recent softening in both domestic and global economic news. While financial markets have probably gone too far in pushing back expectations of the …
8th October 2015
While we think that the overall UK economy would do well either inside or outside the European Union, a Brexit could still have some significant implications for the devolved regions – most obviously if it causes Scotland to think once again about going …
7th October 2015
August’s UK industrial production figures were surprisingly good, although they are not enough to have stopped the overall economic recovery from slowing in the third quarter. … Industrial Production …
The latest business surveys made for dismal reading. Indeed, the average level of the economy-wide Markit/CIPS composite PMI over Q3 as a whole points to quarterly growth in GDP of just 0.5%, following Q2’s 0.7% expansion. However, we doubt that this is …
6th October 2015
We doubt that the UK’s outlook hinges on the Brexit question. Things have changed a lot since 1973, when joining the European Union (EU) was a big deal for the UK. We think that the UK economy will do well over the next few years whether inside or outside …
While the weak tone of the Markit/CIPS services survey in September brought more evidence of a soft end to Q3, we doubt that the economy is on the cusp of a renewed slowdown. … Markit/CIPS Report on Services …
5th October 2015
The economic picture is a little more nuanced than the seemingly relentless barrage of good news last week might have suggested. But the upshot is that we are still feeling pretty good about the outlook for the UK. The recovery has been stronger than …
2nd October 2015
The Monetary Policy Committee (MPC) does not seem too concerned by risks from China, while the recent pick-up in wage growth will worry the hawks on the Committee. Indeed, markets have probably gone too far in again pushing back expectations of a hike to …
1st October 2015
September’s Markit/CIPS report on manufacturing provided further evidence that the economic recovery is extremely dependent on the services sector at present. … Markit/CIPS Report on Manuf. …
The Quarterly National Accounts confirmed that the economic recovery maintained a strong pace in Q2. And although the latest business surveys suggest that growth may have moderated in Q3, we expect this to be only temporary. … National Accounts & Balance …
30th September 2015
The weaker-than-expected tone of September’s GfK consumer confidence survey does little to alter the view that consumer spending growth should maintain a healthy degree of momentum over the coming quarters. … GfK/NOP Consumer Confidence …
It is generally assumed that a UK exit from the EU would lead to a sharp drop in migration, reducing the pool of labour and undermining economic growth. However, a Brexit could lead to a more sensible immigration policy based on skills, rather than …
29th September 2015
Growth in household borrowing strengthened in August. Even so, there is little to suggest that brisk consumer spending has been founded on an unsustainable increase in credit. … Household Borrowing Monitor …
Last week’s public finance figures suggested that deficit reduction has hit a roadblock. But the path of reduction has hardly been a completely smooth one so far. And the strong economic recovery in recent months is yet to feed through fully to tax …
25th September 2015
A British exit from the EU would probably hurt the City in the short term, but it would not spelldisaster. The City’s competitive advantage is founded on more than just unfettered access to thesingle market. And an EU exit would enable the UK to broker …
24th September 2015
August’s public borrowing figures brought the recent run of good news on the public finances to an abrupt end. That said, hopefully this will just be a temporary blip, as tax receipts should be feeling the benefits of the recent strength of the economic …
22nd September 2015
The UK Government could save about £10bn per year on its contributions to the EU’s budget if it left the EU. But a Brexit would not need to create much economic disruption to offset these savings. What’s more, the Government might still have to make some …
21st September 2015
Although the US Fed kept interest rates on Thursday, a rate rise across the pond is not far away. And on the face of it, the pick-up in UK pay growth revealed last week suggested that the Bank of England might not actually be that far off hiking either. …
18th September 2015
Whilst a British exit from the EU may cause the UK to lose out on some foreign direct investment (FDI), access to the single market is not the only reason that firms invest in the UK. Accordingly, we still think that the UK would remain a haven for FDI …
Households are continuing to see substantial increases in their purchasing power. Annual growth in average weekly earnings (excluding bonuses) picked up from 2.8% to 3.2% in July, well above that months near zero-rate of CPI inflation. And the UK looks …
August’s retail sales figures showed that the pace of spending growth on the high street has remained fairly feeble so far this quarter. But we doubt that this signals a more widespread slowdown in the consumer recovery. … Retail Sales …
17th September 2015
Over the next few weeks, we will be publishing a series of pieces of work looking at the impact that leaving the EU would have on the UK economy, culminating in a presentation at our annual conference tour at the end of September. This Focus kicks things …
16th September 2015
The latest labour market statistics confirmed that the recent slowdown in the pace of the jobs recovery was only temporary. However, we don’t think that this will prompt the MPC to hike rates soon. … Labour market data …
Concerns have been mounting about the impact of the introduction of the National Living Wage (NLW) in April next year, with companies such as Next and Whitbread warning that they will have to put up prices to compensate for higher wage rates. We continue …
15th September 2015
