Filtered by Subscriptions: UK Economics Use setting UK Economics
The CBI’s latest surveys suggest that any bounce-back in overall household spending following December’s heavy snow has been short-lived. We continue to think that household spending may fall by around 0.5% this year. … UK CBI Services (Q1) & Dist. Trades …
24th February 2011
In this morning’s MPC minutes, the Committee voiced some concern about how a rate rise might affect consumer confidence. The relationship between interest rates and consumer confidence has weakened since the early 1990s. But with consumers’ incomes …
23rd February 2011
The hawkish tone of February’s UK MPC minutes suggests that the chances of a near-term interest rate rise are higher than previously thought. Indeed, we would now put the chances of a May hike at pretty much 50/50. However, the minutes made it clear that …
January’s public finance figures provided reassurance that the Government is on track to meet this year’s borrowing forecasts. However, we continue to think that the slowing recovery will mean that the Government struggles to meet its borrowing forecasts …
22nd February 2011
Tentative evidence of a rise in pay settlements has raised concerns that the much-feared wage-price spiral is kicking off. However, we remain sanguine about the outlook for pay growth and continue to think that weak wage growth will help inflation to fall …
21st February 2011
We readily admit that we toyed last week with putting a near-term rate rise into our forecast. But, on balance, we are still not quite convinced that a rate rise is now more likely than not. … Near-term rate outlook still finely …
Snow effects are obviously distorting the picture at the moment. But as far as we can tell, the underlying recovery may be struggling a bit. … Post snow bounce-back unlikely to …
18th February 2011
January’s official UK retail sales figures showed that, like the rest of the economy, high street spending bounced back at the start of the year after December’s snowrelated dip. However, the underlying trend looks unspectacular and we still think that a …
February’s Bank of England Inflation Report left the outlook for UK interest rates very finely balanced. But we remain firmly of the view that the markets are currently significantly overstating the likely level of rates over the next couple of years. … …
16th February 2011
The latest UK labour market figures provide further evidence that the jobs recovery has gone into reverse. We continue to think that over the next few years unemployment will climb from its current level of 2.5 million towards 3 million. … UK Labour …
January’s UK consumer prices figures came as something of a relief given the potential for another nasty surprise this month. Although inflation could yet rise further over the next few months, we still expect it to drop back sharply next year. … UK …
15th February 2011
Corporate profits held up remarkably well during the recent economic downturn. But a closer look at the factors that explain this resilience suggests that profits over the next couple of years are unlikely to pick up as sharply as they have done in past …
14th February 2011
The Chancellor is upping the pressure on banks to lend more. But with banks’ funding problems really coming home to roost this year, he might soon feel like he is banging his head against a brick wall. … Funding problems to keep lid on bank …
This week’s Inflation Report will give us a clearer idea of how close a shave last week’s Monetary Policy Committee (MPC) meeting was. Although the Committee will probably revise down its forecasts for economic growth this year, its forecasts for …
Today’s producer prices figures will add to concerns about the persistence of inflationary pressures. However, we still expect inflation to fall sharply next year. … UK Producer Prices …
11th February 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 …
10th February 2011
December’s official industrial production figures suggested that, like the rest of the economy, the manufacturing recovery was blown off course by the bad weather at the end of the year. … UK Industrial Production …
We doubt that the lending commitments announced as part of today’s “Project Merlin” will lead to a significant pick-up in bank lending growth. … Project Merlin no magic fix for bank …
9th February 2011
The deterioration in the UK’s trade position in December primarily reflects temporary factors such as the snow. However, the underlying trend is still pretty dismal. … UK Trade …
The MPC’s reluctance to raise interest rates despite persistently high inflation has led to accusations that it has been inconsistent in its treatment of its inflation target. However, there may be good reasons for the MPC’s “asymmetry”. … Is the MPC …
Perhaps the biggest risk facing the household sector is the possibility of a near-term interest rate rise. We do not think that a modest rate rise would have a disastrous effect on household incomes, although the wider effects of a rate increase could be …
8th February 2011
The minutes of the last Monetary Policy Committee (MPC) meeting suggested that the Committee was edging closer towards a near-term rate hike. But the sharp slowdown in the economic recovery at the end of last year is likely to discourage any members …
7th February 2011
The mood improved considerably after last week’s CIPS/Markit surveys which seemed to suggest that the recovery is back on track again. But, the big picture is that the underlying trend in both the construction and services sector has slowed significantly. …
The bounce in house prices in January is unlikely to signal the start of a rising trend. With the economic fundamentals of the housing market still very weak, the most likely scenario is for house prices to end the year significantly below where they …
4th February 2011
The rebound in the CIPS/Markit surveys in January provides some reassurance that the 0.5% drop in GDP in the final quarter of last year was primarily due to the effects of the snow. However, as far as we can tell, the underlying trend in growth still …
3rd February 2011
The bounce-back in the UK CIPS/Markit report on services in January confirms that the drop in activity in December was partly a temporary result of the snow. Nonetheless, the underlying trend still appears to have slowed. And given the large amount of …
Falling disposable incomes will soon bring the consumer recovery to an end. We still expect spending to start falling again in real terms. … A toxic mix for …
2nd February 2011
A number of puzzles in the UK economy would be resolved if it turned out that GDP has been higher over the past couple of years than the official figures suggest. However, the evidence – while not totally conclusive – largely stacks up against a large …
Broad money growth is still exceptionally weak, adding credence to the view of the majority of those on the Monetary Policy Committee that inflation will fall back sharply in time. … Monetary Indicators Monitor …
1st February 2011
January’s UK CIPS/Markit report on manufacturing suggested that the industrial recovery is still going from strength to strength. But other news on the housing market and money growth gave a more subdued picture of activity in other parts of the economy. …
The renewed falls in mortgage market activity are weighing on house prices. With lending unlikely to pick up significantly this year, due to constraints on both supply and demand, recent falls in house prices are unlikely to prove short-lived. … …
Following last week’s news of a surprise drop in GDP at the end of last year, the wisdom of the Government’s austerity plans has once again been called into question. Accordingly, the coalition would do well to start thinking about possible contingency …
31st January 2011
Low interest rates alone will not prevent the recent falls in house prices from being extended, perhaps significantly this year. Rather, we expect that the benefits of low interest rates will be overwhelmed by rising unemployment, weak house price …
28th January 2011
Yesterday’s disappointing GDP figures re-ignited concerns about a return to so-called “stagflation” – the toxic combination of high inflation and high unemployment/weak economic growth that plagued the UK during the 1970s and early 1980s. However, we …
26th January 2011
The stubbornness of UK inflation has prompted suggestions that there has been an adverse shift in the relationship between growth and inflation and has raised concerns that the low inflation psychology of the last decade or more is under serious threat. …
Although heavily affected by the weather, the UK’s shockingly bad Q4 GDP figures - showing a 0.5% quarterly contraction - raise serious concerns over whether the economy is in a strong enough position to withstand the fiscal tightening. … Preliminary GDP …
25th January 2011
While we expect the economy to keep expanding, we doubt that the recovery is on the sustainable footing required for it to maintain its recent pace. We expect the combination of the fiscal squeeze, falling real household incomes and a slowdown in the …
24th January 2011
Much of the pound’s recent strength appears to have reflected the rise in inflation in the UK and the growing expectation that the Monetary Policy Committee (MPC) will soon be forced to raise official interest rates in response. But sterling’s rise may …
21st January 2011
Abstracting from the effects of the snow, some sort of sluggish recovery in consumer spending still seems to be underway. However, the outlook for this year as a whole remains bleak. … Consumers battle against rising VAT and …
December’s official UK retail sales figures provided further confirmation of the adverse effects of the snow on high street spending last month. Obviously this is just a temporary factor and spending should bounce back this month. Nonetheless, rising …
On the face of it, the latest UK labour market figures provide some tentative signs that the jobs recovery is back on track. But we continue to think that unemployment will rise sharply over the next couple of years as the private sector fails to …
19th January 2011
The recent surge in the oil price to just shy of $100pb will act as yet another brake on the UK’s economic recovery this year just as the fiscal tightening is reaching its most intense phase. … Oil prices another brake on the economic …
18th January 2011
December’s worse than expected UK consumer prices figures will do nothing to ease concerns that the Monetary Policy Committee is neglecting its inflation-targeting remit. But we continue to think that the Committee should ignore such concerns. … UK …
Last week’s decision by the Monetary Policy Committee (MPC) to leave interest rates on hold again will have done nothing to ease concerns that the Committee is allowing a serious inflation problem to develop in the UK. On the face of it, these worries are …
17th January 2011
December’s producer prices figures revealed that cost pressures in the manufacturing sector are continuing to intensify. But this should not prevent consumer price inflation from falling back in the medium term. … UK Producer Prices …
14th January 2011
The Monetary Policy Committee is coming under fire for leaving policy unchanged – as it did again today – in the face of rising near-term price pressures. But we doubt that the Committee has much to gain by raising rates to 0.75% or 1%, while a bigger …
13th January 2011
November’s industrial production figures confirmed that the manufacturing recovery remains in rude health. But the sector’s strong recovery is unlikely to prevent the overall economic recovery from slowing. … UK Industrial Production …
November’s UK trade figures are not as bad as the widening in the headline deficits suggests. However, it is clear that net trade is giving at best a limited boost to the wider economic recovery. … UK Trade …
12th January 2011
