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The latest mortgage lending statistics from the Bank of England show that mortgage market activity weakened once again in August. Declining buyer demand means that approvals could drop even further from here. … Mortgage Lending …
29th September 2010
The Monetary Policy Committee (MPC) may soon relaunch its programme of quantitative easing (or QE). But this time around, the Committee could buy a rather wider range of assets. … What else can the MPC …
28th September 2010
Q2’s national accounts and balance of payments figures brought mixed signals on the fundamental health of the UK economy. There are still good reasons to be concerned over the sustainability of the recovery. … National Accounts & Balance of Payments …
After the recent run of better-than-expected news on the public finances, August’s terrible borrowing figures provided a timely reminder of the scale of the fiscal challenge that lies ahead. … Fiscal strains yet to …
27th September 2010
The Minutes of September’s MPC meeting suggested that the arguments proposed by doves on the Committee are gaining greater currency with the other members. The chances of additional monetary policy stimulus in the form of more QE have increased …
22nd September 2010
August’s public finances figures severely dented hopes that the fiscal position is on a clearly improving trend and cast doubt on the ability of the Government to deliver the fiscal tightening laid out in the June Budget. … Public Finances …
21st September 2010
Last week’s consumer prices figures showing headline inflation holding steady at 3.1% fuelled doubts in some quarters over the MPC’s long held view that spare capacity in the economy will have a strong downward influence on inflation over the medium term. …
20th September 2010
Even if employment is not actually rising quite as quickly as the official figures suggest, the improvement in the jobs market has been pretty impressive. Unfortunately, this looks unlikely to last. … Is employment really rising that …
17th September 2010
August’s fall in retail sales volumes tentatively suggested that the surprising resilience of consumer spending of late could be coming to an end. … UK Retail Sales …
16th September 2010
The pressures on consumers are mounting, with a weakening housing market now adding to the mix. And the drop in the official measure of retail sales in August suggests that consumers might finally be succumbing to these pressures – although other measures …
The latest UK labour market figures showed that while employment is still rising strongly, cracks are appearing in the recovery. We still expect unemployment to rise to 3m or so within the next two or three years. … UK Labour Data …
15th September 2010
Net trade is yet to make a positive contribution to GDP growth during this recovery – in part due to particularly strong import growth. While this is partly a welcome reflection of the recovery in domestic demand, it also looks like the weaker pound is …
14th September 2010
This report is only available as a PDF. Click to download. … UK Consumer Prices (Aug.) …
The changes in the regulatory regime currently being decided are unlikely to be the key determinant of banks lending behaviour in the near-term. But tighter regulation threatens to choke off any recovery in lending further ahead, casting a cloud over the …
13th September 2010
Tomorrow’s inflation figures are likely to show that a further rise in food prices stopped headline inflation from falling more sharply – or at all – in August. However, we doubt that rising food prices materially raise the chances either of a rise in …
Last week brought the first ‘hard’ data relating to the third quarter. Its overall message seems to be that, while growth has not fallen ‘off a cliff,’ it has probably slowed sharply since the rapid expansion seen in the second quarter. … Early signs of …
August’s UK producer prices figures brought further tentative evidence that cost pressures at the start of the inflation pipeline are beginning to ease. … Producer Prices …
10th September 2010
While the MPC predictably chose to leave policy unchanged again today, growing signs that the economic recovery is running out of steam suggest that a further bout of quantitative easing - socalled “QE2” - will be launched later this year or early in …
9th September 2010
This report is only available as a PDF. Click to download. … QE2 being readied for launch …
July’s dreadful trade figures cast further doubt over the ability of the external sector to drive the recovery once the boost from government and consumer spending fades. … UK Trade …
rally in the pound has fizzled out over the last few weeks. But with concerns over the euro-zone likely to re-surface before too long and the UK set to press ahead with a decisive fiscal tightening, the pound could yet make further considerable gains …
8th September 2010
July’s manufacturing output figures defied the rather gloomier tone of some of the recent industrial surveys. Still, there are good reasons to expect the industrial recovery to lose at least some steam over the coming months. … UK Ind. Production …
The latest rise in the Halifax measure of house prices does little to settle the debate about the house price outlook. But the fact that house prices continue to fall on a quarterly basis seems consistent with our forecast of considerable weakness in …
The apparent lack of a “plan B” for the public finances should the economy be weaker than the Government expects supports our forecasts of sluggish growth and further monetary loosening. … "Plan B" is to bank on the …
6th September 2010
With the economic recovery flagging, attention is turning to what further support policymakers can provide. While there are question marks over whether further central bank asset purchases would actually do any good, we think that the Monetary Policy …
Last week didn’t look likely to be a particularly memorable one as far as domestic news is concerned. But it’s just possible that it will turn out to be the week when the threat of a renewed recession in the UK economy first started to look very real. … …
August’s CIPS/Markit Report on Services echoed the sister reports on manufacturing and construction already released this week in signalling a sharp slowdown in growth across the economy. The dangers of a double-dip are growing alarmingly. … UK …
3rd September 2010
There are still few signs that the Monetary Policy Committee (MPC)about to change policy in either direction any time soon. We expect interest rates and the asset purchase programme to be left unchanged again at the forthcoming meeting. … MPC stays …
2nd September 2010
The renewed downturn in house prices signalled by today’s Nationwide index is unlikely to be short-lived. Not only is the market still significantly overvalued on most measures, but the lack of mortgage credit and the weak economic outlook also point to …
October’s rise in the Halifax house price index was widely expected, given the size of the previous month’s drop. Moreover, although far stronger than consensus estimates for a 0.6% rise, the underlying trend still points to accelerating house price …
While the economy expanded strongly in the second quarter, further signs have emerged that growth has since slowed. And the breakdown of Q2 GDP casts additional doubt over the sustainability of the recovery. (See Chart.) Growth was driven by re-stocking, …
1st September 2010
The message from August’s CIPS/Markit Report on manufacturing that the recovery in the industrial sector is losing steam supports our view that overall economic growth is likely to disappoint again in the coming quarters. … CIPS/Markit Report on …
The Bank of England’s mortgage lending statistics for July showed a marginal rise in both the value and volume of mortgages approved. However, the bigger picture is still of subdued activity in the housing market. There is little chance of a marked …
31st August 2010
Firms’ pension funds are still not looking particularly healthy. And a renewed slowdown in the economy could offset any benefits to pension schemes from proposed changes in inflation rules. … Pension funds vulnerable to renewed economic …
The pick-up in the Monetary Policy Committee’s preferred measure of money supply growth has continued to fade. With bank lending so weak, the improvement never looked likely to last. … Monetary Indicators Monitor …
After a weak start to the year, the subsequent modest improvement in the housing market has recently begun to peter out. It may be that this is nothing to worry about, especially given that the wider economic environment has become more supportive. But we …
30th August 2010
The second estimate of UK GDP revealed that the economy expanded even more quickly than previously estimated in the second quarter. But the figures cast further doubt on the sustainability of the recovery. … GDP: Output, Income and Expenditure …
27th August 2010
Our long-standing bullishness on UK government bonds (or gilts) was further borne out last week when ten year yields slipped through our target of 3%. Gilts have been supported by overseas developments, but market worries over the domestic inflation …
23rd August 2010
Not only did the latest UK data suggest that the fiscal position is tentatively improving, but it looks like the slowdown emerging in the wider economy has not spread to the high street yet. … UK Retail Sales & Public Finances …
19th August 2010
The recovery in the overall economy appears to be softening. And although the high street appears to doing well for now, we doubt that consumer spending will be far behind. Consumer confidence appears to be on a downward trend. And the improvement in the …
The minutes of August’s Monetary Policy Committee (MPC) meeting suggested that policy is unlikely to change – in either direction – for some time yet. But we still think that a further policy loosening is likely, perhaps at the start of next year. … MPC …
18th August 2010
The MPCs preferred measure of the money supply has recently started to grow at the rates the Committee was aiming for when it began its policy of quantitative easing (QE). However, we would be wary of reading too much into this improvement. … Is QE …
17th August 2010
