Filtered by Subscriptions: UK Economics Use setting UK Economics
The dovish tone of the minutes of April’s MPC meeting has further reduced the chances of a rise in interest rates at next month’s meeting. If the recent weaker tone of the economic data is sustained, we still think that a rate hike this year can just …
20th April 2011
Rising commodity prices have been boosting import values, meaning that the underlying trade deficit is not quite as bad as the headline figures suggest. Nonetheless, this goes only some of the way to explaining the UK’s disappointing trade performance …
19th April 2011
March’s fall in CPI inflation has given the doves on the MPC some welcome relief in the run-up to the Committee’s crucial May meeting. Granted, it is far too early to proclaim that the inflation threat has now passed. Indeed, inflation still looks set to …
18th April 2011
The labour market recovery is looking a bit healthier, with the private sector apparently managing to offset job cuts in the public sector. But the continued falls in real pay do not bode well for consumer spending. … Labour Market Data …
13th April 2011
March’s drop in both inflation and consumer spending clearly relieves some of the pressure on the Monetary Policy Committee (MPC) to raise interest rates soon. Although inflation is probably set to resume its upward trend later this year, we still expect …
12th April 2011
In theory, GDP has the scope to rise pretty sharply in Q1, by over 1%. But the latest data suggests that the rebound might have been rather more modest than this. … Will Q1 …
11th April 2011
March’s producer prices figures show that cost pressures in the manufacturing sector are continuing to build. But data on the construction sector suggest that the underlying strength of the recovery is still pretty weak. … Producer Prices …
8th April 2011
There had been little to suggest that the Committee had altered its view since the last meeting, so the no-change decision today was of little surprise. However, the next meeting – coinciding with May’s Inflation Report – is the key crunch time. We still …
7th April 2011
The UK economy is still making little progress on rebalancing away from consumers to other parts of the economy. Until net trade starts to improve, a strong and sustainable recovery seems unlikely. … Still few signs of …
Households are already suffering the biggest squeeze on their incomes in decades. But the worst may be yet to come. … Feeling the …
6th April 2011
February’s drop in industrial production is not quite as bad as it first looks. Nonetheless, taken with the drop in March’s CIPS manufacturing survey, it may be that the industrial recovery is past its peak. … UK Industrial Production …
Last month’s marginal increase in house prices is unlikely to set a trend for the rest of this year. With lenders further restricting the availability of credit and the fiscal squeeze intensifying today, there are convincing reasons why house prices …
The latest news on the services sector suggested that the underlying recovery in the biggest part of the economy has picked up steam. But we would be surprised if the sharp improvement is sustained and, on balance, still expect the MPC to hold fire at …
5th April 2011
There is little to suggest that the Monetary Policy Committee has shifted its position at all since its last meeting. A rate rise therefore does not look very likely. A May hike, coinciding with the next Inflation Report, is a bigger risk. But we think …
4th April 2011
The next wave of the fiscal consolidation will hit households this week on so-called “worse off Wednesday”, the first day of the new financial year. We expect the net impact of the main measures introduced this week to knock £2.3bn or 0.25% off …
Last week’s news suggested that the UK economy is still making little progress on the rebalancing that is needed to pave the way for a strong and sustainable recovery. … Slow progress on …
March’s CIPS/Markit report on manufacturing was not disastrous but perhaps poured some cold water on hopes that the industrial sector will entirely avoid the emerging slowdown in the domestic and global recoveries. … CIPS/Markit Report on Manufacturing …
1st April 2011
The Bank of England’s latest survey suggested that credit conditions remain pretty tight, suggesting that a significant pick-up in bank lending still looks unlikely any time soon. Meanwhile, there was nothing too concerning from an inflationary point of …
31st March 2011
There seems to be an assumption that a modest rise in interest rates, of say 25bps or 50bps, would be relatively harmless for the real economy. But we think that even a minor policy tightening could undermine the prospects for a rebalancing and recovery …
30th March 2011
The latest set of monetary indicators add to the reasons to think that medium-term price pressures in the economy are still very weak and that inflation will therefore fall back next year. … Monetary Indicators Monitor …
29th March 2011
Today’s UK data suggested that there is still little evidence of a significant rebalancing in the economy. Indeed, we remain sceptical that the economy is now firmly back on the path to strong health. … Nat. Accounts, Bal. of Pay. (Q4) & H'hold borr. …
We think that the Chancellor was probably right to stick pretty rigidly in last week’s Budget to his austerity plans. Nonetheless, we have said it before and we will say it again – the Government needs a Plan B should the economy turn out to be weaker …
28th March 2011
The weather-related volatility of the past few months has made reading the underlying trend of consumer spending difficult. However, it is increasingly looking like consumers have become much more cautious since the initial post-snow bounce in spending at …
24th March 2011
February’s official retail sales figures added to the increasing amount of evidence suggesting that consumer spending growth has slowed sharply since the initial bounce in spending at the start of the year. … UK Retail Sales (Feb …
The Budget was a fairly cautious affair, with the Chancellor introducing a fiscally neutral package of measures and hence sticking closely to the existing austerity plans. Nonetheless, the Government’s fiscal consolidation plans continue to rest on a …
23rd March 2011
The minutes of March’s MPC meeting show that most Committee members are still reluctant to start tightening monetary policy when there is so much uncertainty about the growth and inflation outlook. A near-term rate rise is still a significant risk, but is …
This checklist is intended to help clients keep track of the important measures and numbers announced during the Chancellor’s Budget speech at 12.30pm and to provide some instant context. … UK Budget Checklist …
February’s public finances and consumer prices numbers presented a distinctly unfavourable backdrop to tomorrow’s Budget. … Consumer Prices & Public Finances …
22nd March 2011
The catastrophic events in Japan have contributed to a reassessment of the likely path of UK interest rates that was already underway before the tragedy struck. Nonetheless, a strong signal from the Government in Wednesday’s Budget that it intends to …
21st March 2011
The latest labour market figures gave slightly mixed messages. But the fundamental picture is that both activity and price pressures in the labour market remain weak. … UK Labour Market Data …
16th March 2011
The Budget on March 23rd will probably include some minor measures to ease concerns over the economy and sky-high oil prices. But the Coalition Government is not likely to signal any significant scaling back of its planned spending cuts. The big squeeze …
15th March 2011
News on consumer spending has been trickling in over the last couple of weeks. While each piece of news has not been significant on its own, put it all together and a pretty convincing picture of a sharp slowdown in consumer spending growth emerges. … …
14th March 2011
February’s producer prices figures revealed another sharp rise in firms’ costs. But they also provided a bit of reassurance that consumer price inflation should still fall sharply next year. … UK Producer Prices …
11th March 2011
With the economic outlook little clearer than when it last met, it was never that likely that the Monetary Policy Committee would act today. We still think that the chances of an interest rate rise in the next few months have got pretty close to 50/50. …
10th March 2011
January’s UK industrial production figures show that the manufacturing recovery has retained a lot of momentum. But given the sector’s relative small share of GDP, it will still make only a modest contribution to the overall economic recovery. … UK …
Temporary factors drove at least part of the improvement in the UK’s trade position in January. As with the rest of the economy, reading the underlying trend at the moment is fairly tricky. Nonetheless, we still doubt that the external sector will fully …
9th March 2011
House prices fell a little further in February and activity levels remained static at depressed levels. Consistent with that, the BRC survey brought further evidence that the squeeze on household incomes, as well as rising uncertainty over job security …
8th March 2011
The Monetary Policy Committee (MPC) seems to be getting closer to raising interest rates soon. However, most members still want to wait for a clearer picture regarding the underlying pace of recovery. And the latest data have done little to clarify …
7th March 2011
The rise in oil prices has raised fears about the prospects for the economic recovery. Obviously the economy has changed a great deal since the oil price shocks of the 1970s, when sharp oil price rises pushed the UK into recession. Nonetheless, the …
The latest decline in the Halifax house price index underlines that the pressures weighing on prices are still very much with us. If, as we expect, these pressures build this year – for example, if unemployment rises sharply – then significant house price …
4th March 2011
A two speed recovery appears to be emerging, with a buoyant manufacturing sector contrasting with a struggling housing and consumer sector. … Two speed recovery …
3rd March 2011
This Focus sets out the key pay settlements which are likely to be concluded in the coming months. A number of settlements have already been concluded this year and data provider IDS has reported that the median pay settlement rose from 2.2% to 2.8% in …
February’s UK CIPS/Markit report on services showed that growth in the biggest part of the economy has slowed since January’s post-snow rebound. However, it remains hard to gauge how well the underlying recovery is faring. … UK CIPS/Markit Report on …
Concerns about the knock-on effects of the rise in inflation on inflation expectations tend to focus on the expectations of households and financial markets. But of most direct importance for the inflation outlook is whether firms think that there has …
2nd March 2011
The MPC’s preferred measure of broad money growth has continued to accelerate and is now getting pretty close to the rates the Committee has been aiming for. However, we doubt that this growth can be sustained when bank lending is still so weak. … …
1st March 2011
Today’s data further highlight the growing divergence between the strength of the recoveries in the industrial and consumer sectors of the UK economy. … CIPS/Markit Report on Manuf. (Feb.) & H'hold borrowing …
This morning’s data paints a picture of a housing market that is struggling for direction. But while the pace of any further falls is hard to judge, with mortgage demand so low, February’s modest rise in the Nationwide house price index is unlikely to be …
The Monetary Policy Committee has suggested that nominal GDP growth can be sustained even if money growth remains weak. This might happen to some extent. But the big picture is that money growth at its current rates is still consistent with a sluggish …
28th February 2011
The MPC’s hawks now need the support of just two more members to push through an interest rate rise. Some members (such as Paul Tucker) look more likely to switch sides than others (such as Charlie Bean or David Miles), but ultimately what rates do will …
The slight downward revision to UK GDP in Q4 means that, snow effects aside, activity is now estimated to have contracted a touch at the end of last year. Although the economy bounced back in January, it remains unclear how far this just reflects weather …
25th February 2011
