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It is only a month since the Monetary Policy Committee (MPC) resumed its quantitative easing (QE) programme, so no action was likely at today’s meeting. Nonetheless, we expect both an interest rate cut and a further extension of the asset purchase …
2nd August 2012
July’s CIPS/Markit report on manufacturing demonstrated that the drag from the euro-zone’s debt crisis on the UK’s industrial sector is building. … CIPS/Markit Report on Manufacturing …
1st August 2012
The third consecutive quarterly contraction in Q2 left the UK economy lagging even further behind its main competitors. … Double-dip …
Broad money and lending growth plumbed new lows in June, supporting our subdued forecasts for both inflation and economic growth. … Monetary Indicators Monitor (Jul. …
31st July 2012
Despite the recent falls in inflation and unemployment, consumer sentiment remains very depressed. The Olympic Games might give confidence a near-term boost, but any uplift will probably be short-lived. … GfK/NOP Consumer Confidence …
June’s household borrowing figures seem to have been depressed by a series of temporary factors. Nonetheless, there are also signs that both the underlying supply of and demand for credit is fading. … Household Borrowing Monitor …
30th July 2012
July’s CBI Distributive Trades Survey indicated that retail sales growth slowed by more than retailers expected. Although real incomes may be rising modestly soon, we doubt that this will prevent sales growth from slowing further later this year. … CBI …
Having extended its asset purchases at July’s meeting, the Monetary Policy Committee (MPC) is unlikely to make any changes to its quantitative easing QE) programme this week. We expect more QE and a 25bps cut in rates in November. … Inflation Report to …
Last week’s surprisingly poor GDP figures once again called into question the reliability of the data. But the weakness is consistent with the low level of construction orders and the slowdown in the growth of tax receipts. And output would have to be …
A look at the so-called misery index, a simple sum of the unemployment and inflation rates, suggests that households should be starting to feel a bit happier. But we think that the recent improvement could be short-lived. … Improvement in misery index may …
27th July 2012
The news that the economy contracted for a third successive quarter has led to renewed warnings that the UK will lose its AAA credit rating. We have long been of the view that the weakness of the economy and the resulting impact on the fiscal position …
26th July 2012
The UK fell deeper into recession in the second quarter. Although some temporary factors pulled down output, it looks like there was some underlying contraction too. Even allowing for a decent bounce-back in Q3, our forecast for a 0.5% fall in GDP in 2012 …
25th July 2012
A further interest rate cut is looking increasing likely. We have pencilled in a 25bps reduction in November, taking official rates to 0.25%. And it is possible that the Monetary Policy Committee (MPC) takes rates even closer to zero, following the …
24th July 2012
The 30% increase in global agricultural commodity prices over the last month has prompted fears of a renewed squeeze on households’ incomes. However, food prices would have to rise much further to prevent a recovery in real pay. … Will global food prices …
23rd July 2012
A close look at last week’s figures suggests that some of the apparent divergence between the strong employment and weak GDP figures may be explained by the Olympics. Come Games time, more than 100,000 workers will be employed, and it seems that many of …
June’s public finance figures continued the underlying deterioration in the fiscal position evident since the beginning of the financial year. … Public finances (Jun. …
20th July 2012
Although consumer spending appears to have boosted at the start of June by the extended bank holiday, the fillip did not last for long and the underlying trend in spending still looks pretty mediocre. At least consumers seem willing to spend when an …
19th July 2012
June’s small rise in retail sales volumes suggested that the Jubilee provided only a negligible fillip. Indeed, abstracting from the temporary factors that have influenced spending recently, the underlying trend in sales still seems to be flat. … Retail …
The latest regional figures show that the economic recovery in the Midlands has lost considerable pace. Meanwhile, although the official figures show that employment has continued to grow in most of the regions, surveys suggest that this recovery will run …
18th July 2012
The Government’s new scheme to use its balance sheet to boost private sector infrastructure spending is a step in the right direction. However, there are a number of reasons why the eventual boost to investment will probably be smaller than the Government …
The vote to do more quantitative easing (QE) this month was not unanimous, but the tone of the minutes was nonetheless pretty dovish. We still expect more asset purchases to be announced before the end of the year. … MPC Minutes (Jul.) & Labour market …
UK inflation fell by more than expected for the second month in a row in June. Inflation is finally within sight of the 2% target and we still expect it to be well below the target by the end of the year. … Consumer Prices …
17th July 2012
The effects of early June’s Jubilee celebrations are now starting to come through in the economic data. Last week’s releases provided evidence of the positive effects of the extended holiday, but unfortunately it won’t be long until we see the negative …
16th July 2012
The poor economic outlook means that the ongoing growth versus austerity debate is just as relevant to the UK as to the rest of Europe. And it now looks like we may have reached the point where the Government should think again about ploughing on with the …
13th July 2012
There are some reasons to hope that households should soon find it a bit easier and cheaper to borrow. But whether households will want to borrow more is another matter. … Is lending to households set to …
The further rise in the pound against the euro appears to reflect safe-haven demand for UK assets and the weakening outlook for the euro-zone economy. These factors could yet push sterling higher. … Rising pound dents UK export hopes …
This report is only available as a PDF. Click to download. … Risks from the euro-zone …
12th July 2012
A further fall in inflation this year is largely “baked in the cake”. Here we outline the main factors set to influence inflation over the rest of 2012. By the end of the year, it could be below 1%. … What to expect from inflation for the rest of this …
11th July 2012
May’s industrial and trade figures were not quite as strong as they first appeared. Abstracting from the one-off factors affecting the official figures, it still seems as if an underlying slowdown is taking place in both sectors. … Industrial Production & …
10th July 2012
June’s BRC Retail Sales Monitor supports other evidence suggesting that the extended Jubilee holiday boosted demand on the high street in the early part of the month. But that boost seems to have been short-lived. … BRC Retail Sales Monitor …
With the drag from the euro-zone crisis on the UK economy set to grow, the chances of a decent recovery rest heavily on a strong revival in domestic spending. But neither firms nor households appear to be in a position to put the overall economy back on a …
9th July 2012
Any chances of the economy escaping a third quarterly contraction have receded in light of the latest surveys and official data. Admittedly, June’s CIPS surveys point to output being flat over the quarter, but they may well have understated the …
The 1%m/m rise in the Halifax index in June does little to alter the underlying trend which shows that house prices are grinding lower, albeit only slowly. … Halifax House Prices …
5th July 2012
The near-term inflation outlook has improved significantly in recent weeks. Inflation has fallen below 3% for the first time since the end of 2009. It will come under further downward pressure from the recent drop in oil and petrol prices. And we still …
4th July 2012
June’s CIPS/Markit report on services showed that activity in the biggest part of the economy is weakening, implying that the MPC is almost certain to decide on more quantitative easing (QE) at its meeting tomorrow. … CIPS/Markit Report on Services …
Prices in London’s prime property markets, especially residential, look very vulnerable to a major financial market shock, or anything that might undermine investors’ desire to use London property as a safe haven. Yet, if we are right, that the euro-zone …
The low level of housing equity withdrawal is an indication of how the subdued housing market may be limiting households’ ability and willingness to spend. … Housing Equity Withdrawal …
Unsecured consumer credit growth has picked up, although we think that this could be an indication of consumer weakness rather than strength. There are still few signs of a more widespread recovery in household borrowing. … Household Borrowing Monitor …
3rd July 2012
The weakness of money and lending growth is one factor likely to prompt the Monetary Policy Committee (MPC) to announce more quantitative easing (QE) this week. … Monetary Indicators Monitor …
May’s decline in mortgage approvals was surely related to the fact that lenders are once again reducing the availability of mortgage credit. Against a backdrop of renewed recession in the UK and the escalating crisis in the euro-zone, mortgage approvals …
As part of its renewed drive to rejuvenate the economy, the MPC looks set to announce more purchases of government bonds soon. But further gilt purchases may do little good and could even become counter-productive. Accordingly, we think that the Monetary …
2nd July 2012
The improvement in the CIPS report on manufacturing in June mainly reflected a bounce-back following May’s unexpectedly sharp fall, rather than any fundamental improvement. The big picture is that the manufacturing sector is still in decline. … …
There have been plenty of signals over the past few weeks that more quantitative easing (QE) is on its way. Although the Committee could wait until August’s Inflation Report, there seems to be little point in doing so when the case for more stimulus is so …
If core inflation falls as we expect, it now looks like inflation could get as low as 0.5% or so in the early part of next year. … Inflation outlook improves …
With the GfK/NOP measure of consumer confidence unchanged in June, the anticipated boost to consumer spirits from the Jubilee celebrations does not seem to have materialised. … GfK/NOP Consumer Confidence …
29th June 2012
Today’s news on the state of households’ finances revealed that the continued drop in real income is taking its toll on consumer spending, as well as preventing households from taking the steps required to repair their balance sheets. … Households hit by …
28th June 2012
The economy is still estimated to have contracted at the start of the year and it is probably still in recession now. We continue to expect GDP to shrink by 0.5% this year and expand only modestly next year. … National Accounts (Q1) & Credit Conditions …
June’s CBI Distributive Trades Survey suggested that demand on the high street picked up very strongly in June, probably reflecting the impact of the extended Jubilee holiday. However, we do not expect this pick-up to last. … CBI Distributive Trades …
27th June 2012
A referendum on the UK’s membership of the EU seems to be becoming a more realistic prospect. We think that concerns about the economic disruption if the UK were to leave are overdone. In fact, the economy could end up better off. … Would leaving the EU …
May’s public finance figures suggested that the double-dip recession is weighing on the public finances. … Public finances (May) …
26th June 2012
