Filtered by Subscriptions: UK Economics Use setting UK Economics
One of the key questions faced by the Office for Budget Responsibility in producing its economic forecasts for this week’s Autumn Statement is whether the recent outperformance of the UK economy compared to the rest of the G7 can be sustained. While the …
2nd December 2013
The latest broad money supply figures support signs that the economic recovery has remained strong in the fourth quarter. Meanwhile, bank lending has begun to show some tentative signs of improvement, increasing the chances that the recovery is sustained. …
29th November 2013
Talk of a recovery fuelled by lending growth continues to be overdone. Accordingly, while the willingness of the Bank of England to curb lending may hold back any strong revival in credit, this need not undermine the economic recovery. … Household …
November’s fall in consumer confidence suggests that households are still not feeling the full benefit of the economic recovery. Nonetheless, some solid props to consumer spending are on the horizon. … GfK/NOP Consumer Confidence …
Alongside the release of its Financial Stability Report, the Bank of England has unveiled new measures to blunt the incentives for banks to make new mortgage loans. While these initiatives may do little directly to cool the housing market, the Financial …
28th November 2013
With the economic recovery yet to have much impact on the Government's popularity, Chancellor George Osborne may be tempted to use the proceeds of stronger growth to fund a small giveaway in the Autumn Statement. But the big picture is that the fiscal …
November’s CBI Distributive Trades Survey suggests that the recovery in retail sales has lost some pace recently. But there are a few signs that retailers are anticipating a healthier Christmas period. … CBI Distributive Trades Survey …
27th November 2013
The second estimate of Q3 GDP confirmed that the UK economy is experiencing a period of strong growth. And while the expenditure breakdown showed that household spending has remained the main driver of overall growth, the pick-up in investment provides …
Growth in household spending continues to drive the economic recovery. In the near-term, rising house prices and consumer credit should support further expansion. But a solid foundation of rising real earnings will be needed before a return to the rates …
Although small retailers suffered much more than large ones during the economy’s post-2008 weakness, more recently, small retailers have started to outperform their larger competitors. But we doubt that large retailers are at risk of losing much market …
26th November 2013
This week’s second estimate of GDP looks set to confirm that the UK economy was the fastest growing G7 economy in the third quarter. But the Government’s shortfall in the opinion polls suggests that it is still struggling to take much of the credit for …
25th November 2013
Although October’s public finance figures were a little disappointing, borrowing this year still looks set to come in substantially below the OBR’s March forecast. While the Chancellor is likely to exercise restraint, he has some scope to fund for a …
21st November 2013
November’s MPC minutes echoed the message of the Bank of England’s November Inflation Report that UK monetary policy is on hold for the foreseeable future. … MPC minutes …
20th November 2013
The recovery in the housing market has so far had little impact on total sales of household goods. But digging a little deeper, spending on items linked more closely with house purchases has risen quite strongly. As the housing market continues to revive …
18th November 2013
The changes to the MPC's unemployment forecasts revealed in its November Inflation Report last week forced the Committee to play down the strict interpretation of its own forward guidance that interest rates could be on the rise as soon as the end of next …
Attention on what has been termed the “cost of living crisis” has fuelled speculation that December’s Autumn Statement will include measures to cut energy bills. And even if funding of the ‘green’ measures currently pushing up bills was shifted to …
15th November 2013
Data for the early part of Q4 suggests that the consumer recovery may be stumbling slightly. But the picture should improve in the run-up to Christmas. October’s sharp drop in inflation, combined with recent strong labour market data, may herald a …
14th November 2013
October’s surprise fall in retail sales volumes highlights that, despite the hype over the economic recovery, the revival in the consumer sector remains a fragile one. That said, October’s disappointing outturn is hopefully only a temporary setback. … …
November’s Inflation Report provided some superficial support for expectations that interest rates will rise sooner than the MPC suggested back in August. But we still think that the disinflationary effects of the spare capacity in the economy will keep …
13th November 2013
October’s inflation figures suggest that the UK economy is hitting a sweet spot of accelerating GDP growth and declining price pressures. And inflation is likely to fall further in the near future. … Consumer Prices & Producer Prices …
12th November 2013
Underemployment, where people are in employment but want to work more hours, reached a record high in the first half of 2013. This means that there is more slack in the labour market than the unemployment rate suggests and implies that wages will recover …
This week’s Bank of England Inflation Report looks likely to include a downward revision to the MPC’s forecast for the unemployment rate, bringing forward the date at which it is expected to hit the 7% level at which the Committee will re-assess policy …
11th November 2013
September’s trade figures show that the UK economy continues to see an imbalance between domestic and overseas demand. And while export surveys have been positive, consumer demand may mean the trade deficit is slow to narrow in the near-term. … Trade …
8th November 2013
The ONS’ latest population projections suggest that the UK’s population will age even more rapidly than previously expected. But we doubt this will feed into a one-for-one fall in workforce growth and hence the future unemployment rate. … Ageing …
The MPC should think twice before concluding that the fall in interest rate expectations and gilt yields in recent months is a sign that markets are coming around to its views on the economic outlook. The belief that US interest rates will be left looser …
7th November 2013
While real pay looks set to continue to fall until mid-2014, rising wealth, further modest gains in employment, income tax cuts and looser credit conditions should all help to sustain the recovery in consumer spending in the meantime. … Spending …
With the economic recovery proceeding more quickly than the MPC expected, but little pressure on forward guidance’s knockouts, today’s decision to leave policy unchanged was probably a unanimous one. But next week’s Inflation Report could have a material …
September’s industrial production figures showed that the sector is continuing to recover, albeit more slowly than indicated by the recent surveys. As things stand, production looks on course to rise at a faster pace in the fourth quarter than in Q3. … …
6th November 2013
The economic recovery still seems to be gathering speed. The 0.8% quarterly rise in GDP in the third quarter was the strongest expansion seen since Q2 2010. And whereas a year or so ago, the recovery was dependent on growth in a handful of sectors, output …
5th November 2013
The CIPS business surveys suggest that the UK economy got off to a very strong start in Q4. An improvement on Q3’s 0.8% expansion would seem eminently possible. … CIPS/Markit Report on Services …
The BRC’s measure of retail sales pointed to fairly subdued growth in spending in October. But we still think the outlook for the retail sector remains fairly favourable. Improving levels of consumer confidence should support spending in the near term …
With GDP growth in Q3 coming in slightly above the MPC's forecast and unemployment falling more rapidly than expected, when the Committee might reconsider the stance of monetary policy has continued to excite commentators. But with members currently …
4th November 2013
One part of the economy which has not shown much of a pick-up in recent months has been lending to households and firms. However, we are not too concerned about what, at present, is a pretty creditless recovery. Households and firms have plenty of liquid …
October’s CIPS/Markit report on manufacturing suggested that output in the sector has continued to expand at a robust pace despite recent unhelpful developments such as sterling’s appreciation and the US debt ceiling crisis. … CIPS Report on …
1st November 2013
Although it fell slightly, UK consumer confidence remained high in October and should continue to buttress growth in household spending, in spite of the headwinds presented by falling real pay and the high level of household debt. … GfK/NOP Consumer …
31st October 2013
Some of the recent recovery in spending by UK households has been accounted for by spending abroad. So while the official household spending figures show growth, data for domestic spending are less encouraging. And as the economy recovers, UK consumers’ …
30th October 2013
Recent strong growth in certain measures of broad money suggests that the economic recovery has plenty of momentum at present. But the continued weakness of bank lending remains a reason to be cautious about the growth outlook. … Monetary Indicators …
29th October 2013
Despite the revival in the housing market and the role of consumer spending in driving the rebound in the economy, the economic recovery continues to remain a relatively creditless one. But this should not act as too much of a barrier to consumers’ …
On close inspection, the recent rises in inflation expectations among households and in the gilt market appear to be nothing to worry about. The risk that the Monetary Policy Committee (MPC) abandons its forward guidance because of spiralling inflation …
28th October 2013
October's CBI Distributive Trades Survey results surprised on the downside, with sales growth at its lowest since June. But there are good reasons to think this was probably just a one-off and that retail sales should continue to grow at a decent rate. …
With last week’s GDP figures providing further evidence that the economic recovery is becoming entrenched, the recovery should be able to withstand the looming round of energy price hikes. Indeed, other recent commodity price movements have actually …
The preliminary estimate of Q3 GDP confirmed that the UK economy is currently enjoying a period of healthy and well-balanced growth. Meanwhile, Mark Carney announced last night in a speech reforms to the Bank’s liquidity provisions. … Preliminary GDP …
25th October 2013
The CBI’s Industrial Trends Survey for October and the fourth quarter provided reassurance that the manufacturing recovery has not been knocked off course by sterling’s recent appreciation or the disruption from the US debt ceiling debacle. … CBI …
24th October 2013
The prospects for the leisure sector look reasonably good. A cyclical rebound will help the sector in the near-term. And longer-term, leisure spending will disproportionately benefit as people both get richer and have more free time. … Sector insight: …
23rd October 2013
October’s MPC minutes yielded little for Bank of England watchers, with the Committee unanimously in favour of keeping policy unchanged. While unemployment is falling a little faster than the Committee expected, the scope for productivity to recover means …
Although the economic recovery has taken its time to come though in the fiscal numbers, September’s public finances data suggested that the Exchequer is now reaping the rewards of a stronger economy. The Chancellor can look forward to delivering some good …
22nd October 2013
Given the latest round of utility price rises and a further slowdown in pay growth, it might seem that the squeeze on household incomes is never going to end. However, we remain optimistic that real pay should finally start to rise again in the middle of …
21st October 2013
Although real earnings are still being squeezed hard, one positive factor for households is that the pace of the Government's fiscal tightening is easing a bit ahead of 2015's general election. But austerity is still exerting some drag on consumer …
Last week's deal on the US shutdown took the unlikely, but potentially catastrophic, possibility of a US sovereign default off the table. Admittedly, a series of potential US fiscal flashpoints still lie ahead. But there are good reasons to think they …
The consumer recovery remains on track. Consumer confidence is still rising and the housing market will receive a fillip from the second stage of the Help to Buy Scheme. Admittedly, it will be a while before real pay starts to rise again, especially with …
18th October 2013
