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July’s consumer prices figures should provide some reassurance that underlying price pressures in the UK economy are finally starting to ease. … UK Consumer Prices …
17th August 2010
July’s consumer prices figures should provide some reassurance that underlying price pressures in the UK economy are finally starting to ease. … Core price pressures finally starting to …
The distinctly dovish tone of last week’s August Inflation Report begs the question of whether the Monetary Policy Committee is damaging the credibility of the policy framework by deliberately turning a blind eye to persistently strong price pressures. … …
16th August 2010
The Bank of England’s August Inflation Report confirmed that the MPC still expects inflation to fall back sharply once temporary upward forces fade. As such, a policy loosening still looks more likely than a tightening in the foreseeable future. … Bank of …
11th August 2010
The latest UK labour market figures showed that employment is rising strongly now that the wider economic recovery has gained some momentum. But the looming fiscal squeeze suggests that this will be only a brief respite. … UK Labour Data …
June’s trade figures were better than expected, but it still looks unlikely that the external sector will be able to offset the weakening already emerging on the consumer side of the economy. … UK Trade (Jun.) & BRC Retail Sales Monitor …
10th August 2010
The interim results published by the major UK banks last week showed that RBS and Lloyds are on track to meet their new lending commitments to the Government. But these lending targets have become pretty meaningless. The big picture is that net lending to …
9th August 2010
The latest data on UK industry suggest that, for now at least, both activity and cost pressures in the sector remain pretty strong. But there are good reasons for expecting both to weaken somewhat over the coming months. … UK Ind. Production (Jun.) & …
6th August 2010
Today’s decision to leave interest rates on hold again presumably reflected growing signs that the recovery in the UK and global economies is running out of steam. With an enormous fiscal squeeze ahead, we still expect monetary policy to stay extremely …
5th August 2010
July’s UK CIPS/Markit report on services provided further evidence that the economic recovery has cooled since the strong 1.1% quarterly rise in GDP in Q2. … UK CIPS/Markit Report on Services …
4th August 2010
House prices rose in July, reversing some of the recent falls. But this does not alter our view that prices are set for a period of considerable weakness in the remainder of this year and into 2011. … Halifax House Prices …
The fiscal contraction is now well and truly underway. However, we doubt that the conditions are in place for the economy to take such a sharp squeeze in its stride. … Can the UK survive the squeeze? (Q3 …
3rd August 2010
You could be forgiven for being puzzled by the recent data on consumers. After all, figures released last week on retail spending and the housing market gave markedly different signals on the current health of and outlook for household spending. … How …
2nd August 2010
The sheer scale of the fiscal squeeze means that consumer spending will struggle to rise in the next few years. … Spending will struggle to grow during fiscal squeeze (Q3 …
The economy managed a much stronger than expected expansion in the second quarter, with GDP rising by 1.1%. (See Chart.) However, this is likely to be as good as it gets for this stage of the economic recovery. Timelier measures of activity such as the …
July’s UK CIPS/Markit report on manufacturing brought further evidence that the recent impressive recovery in the industrial sector of the economy is beginning to lose a little bit of steam. … CIPS/Markit Report on Manufacturing …
The subdued picture of lending activity was reinforced today as mortgage approvals for house purchase recorded their largest fall for five months. Although we doubt approvals will fall significantly further from here, we see little immediate prospect of a …
29th July 2010
The recent pick-up in the Monetary Policy Committee’s favoured measure of the money supply may already be fading. Meanwhile, bank lending is still struggling to rise. … Monetary Indicators Monitor …
The drop in the Nationwide house price index in July was hardly a surprise given the generally downbeat signs from other housing market data over the past few weeks. But it adds to the growing body of evidence that the past year’s house price gains have …
There are still few signs that Andrew Sentance’s view that interest rates need to rise is gathering much support from the rest of the Monetary Policy Committee (MPC). In fact, the minutes of the last meeting contained the strongest steer for a while that …
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. … Mortgage …
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 UK banks look likely to receive a relatively clean bill of health in the stress tests, tha is unlikely to have much of an impact on the outlook for the economy. After all, while recent weeks have seen some signs of renewed concerns over the …
26th July 2010
Today’s paper on financial regulation beefs up the Government’s plans to expand the Bank of England’s toolkit. But there are still big uncertainties about how this will operate in practice, while the paper on company finance underlines that there is no …
The UK economy grew significantly more quickly than expected in the second quarter of the year. But there are still good reasons to expect the recovery to be pretty lacklustre in the coming quarters. … Preliminary GDP …
23rd July 2010
Recent press reports have suggested that the Government may be considering an early sale of some of its banking sector assets. However, any sales are unlikely to improve the fiscal outlook and may make the aim of boosting bank lending harder to achieve. … …
22nd July 2010
Consumers do not appear to have let concerns about the fiscal squeeze affect their spending too much yet. Nonetheless, there are some signs that the spending recovery is starting to lose momentum. And the sheer scale of the looming tax rises and …
June’s official retail sales figures suggested that the prospect of the sharpest fiscal tightening in decades hasn’t stopped consumers spending yet. But we doubt that this strength can last. … Retail Sales …
We expect the fiscal tightening to leave real household disposable incomes falling by 1% next year and stagnating in 2012 the tightest squeeze since the mid-1970s. As a result, we no longer expect consumer spending to start rising in 2011 and instead …
21st July 2010
This report is only available as a PDF. Click to download. … MPC Minutes (Jul.) …
June’s public finances figures put something a dent in recent hopes that the fiscal position is now on a clearly improving path. … Public Finances …
20th July 2010
Last week’s rise in core inflation suggested that the spare capacity in the economy still isn’t having much of an impact. Core goods inflation is now on a downward trend – but is being offset by a rise in services inflation. … Pick-up in services …
19th July 2010
The new coalition Government has made an industrious start. But it still faces some major policy challenges if it is to achieve the multiple goals of sorting out the public finances, improving financial stability, keeping inflation low and securing the …
15th July 2010
One of the Government’s biggest economic challenges is getting the banks to lend more, with the major banks reportedly meeting with the Chancellor today to discuss the issue. In the near-term, this is likely to involve toughening up the lending targets …
The UK labour market is starting to benefit from the recovery in the wider economy. But we still doubt that private sector hiring will be able to offset the sheer scale of the looming public sector job cuts. … UK Labour Data …
14th July 2010
The further fall in headline inflation in June suggests that there is still little pressing need for an interest rate rise. But with core price pressures remaining stubborn, inflation nerves will remain for a while yet. … UK Consumer Prices …
13th July 2010
Data released last week supported the view that, while the economy probably grew at a solid pace in the second quarter, that may be as good as it gets as far as the pace of the UK economic recovery is concerned. … As good as it …
12th July 2010
Q1’s national accounts highlighted the fragility of the recovery seen so far. We still doubt that the economy is in good enough shape to withstand the fiscal squeeze that is about to start in earnest. … National Accounts & Balance of Payments …
May’s trade figures continued the recent run of disappointing news on the UK recovery. But at least price pressures in the industrial sector appear to be easing. … UK Trade …
9th July 2010
Today’s no-change decision confirms that the majority of the Monetary Policy Committee (MPC) still sees no pressing need to tighten monetary policy. With the biggest fiscal squeeze in decades getting underway, we think that the economy needs all the …
8th July 2010
May’s UK industrial production figures added to recent tentative evidence that the pace of economic recovery may have peaked in the second quarter. … UK Industrial Production …
Already we’re starting to get a feel for just how nasty the effects of the looming cuts in government spending will be. The OBR last week revealed that it expects over 600,000 public sector job cuts over the next five years (compared to our own estimate …
5th July 2010
June’s UK CIPS/Markit report on services provided further evidence that the recovery in the largest sector of the economy has lost momentum since the start of the year. … CIPS/Markit Report on Services …
The £40bn of additional fiscal tightening announced in June’s emergency Budget takes the total tightening to some £128bn by 2015/16, the equivalent of some 8% of GDP. (See Chart.) With the private sector unlikely to compensate fully, we continue to think …
1st July 2010
