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June’s UK CIPS/Markit report on manufacturing confirms that the recovery in the industrial sector remains robust. But with export orders stalling and credit conditions still tight, the prospects for the broader economy are far less encouraging. … …
1st July 2010
The Monetary Policy Committee (MPC) is getting increasingly nervous about the current rise in inflation, as evidenced by Andrew Sentance’s vote for an interest rate rise last month. However, most members still seem prepared to wait and see if the spare …
After outstripping income growth for over a year now, house price gains more or less stalled in June. The impact of the fiscal squeeze on incomes and confidence is likely to drive house prices back down again over the next 18 months. … Nationwide House …
30th June 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. … Nationwide House Prices …
Growth of the Monetary Policy Committee’s favoured measure of the money supply has continued to pick up pace, but we doubt that this means that a strong pick-up in money spending is soon to come. … Monetary Indicators Monitor …
29th June 2010
The latest mortgage lending numbers from the Bank of England were little changed from last month, indicating a lending market that remains very subdued. … Mortgage Lending …
Last week’s tougher than expected Budget has helped to ease market concerns about the UK’s fiscal outlook, but it won’t eliminate them altogether. For a start, the vast bulk of the planned fiscal squeeze will come in the form of spending cuts which will …
28th June 2010
Given that the Bank of England has been criticised for not shouting loudly enough about the risks of a banking crisis, the gloomy tone of its latest Financial Stability Report (FSR) is perhaps unsurprising. That said, we agree with its message that the …
25th June 2010
The minutes of June’s Monetary Policy Committee (MPC) meeting showed that a divide is starting to open up about the risks to the inflation outlook. But most members still seem to believe that the slack in the economy will bring inflation down from its …
23rd June 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 …
22nd June 2010
Fears that a rise in capital gains tax would rapidly destabilise the fragile house price recovery appear to have been overdone. But the scale of the fiscal squeeze announced by the Chancellor today was, if anything, tougher than had been anticipated. And …
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 …
Last week’s interim forecasts from the Office for Budget Responsibility (OBR) sprung something of a surprise in revealing a lower projected path for public borrowing over the next five years than that presented by Alistair Darling back in March. … The …
21st June 2010
May’s public finance figures continued the recent run of slightly better than expected news on the fiscal position. But the big picture is still that a major fiscal squeeze looms, with tough measures set to be announced in Tuesday’s Budget. … Public …
18th June 2010
There is clearly a strong chance that Tuesday’s emergency Budget contains a rise in VAT. While this might make the MPC’s job a bit trickier, we doubt that it would push the Committee into raising interest rates prematurely – especially given the adverse …
17th June 2010
Although the latest news has been mixed, consumer spending on the whole appears to be holding up well. But there are other signs that cracks in the recovery are appearing, including recent falls in consumer confidence and borrowing. With the emergency …
May’s official retail sales figures suggested that high street spending has not weakened as much as the recent retail surveys have suggested. Nonetheless, it is hard to see spending on any measure holding up once the fiscal squeeze starts. … UK Retail …
The UK labour market is showing tentative signs of improvement, but still looks too fragile to withstand the looming public sector job cuts. … UK Labour Data …
16th June 2010
The new Governments emergency Budget on June 22 will mark the beginning of the biggest fiscal squeeze seen since the end of the Second World War. This will act as a significant drag on the economy over the next few years and necessitate the need for …
15th June 2010
May’s UK consumer prices figures provided some reassurance that the MPC will be able to avoid the nightmare scenario of having to raise interest rates just as an enormous fiscal squeeze hits the economy. … UK Consumer Prices …
The lower path of public borrowing projected by the Office for Budget Responsibility might seem to relieve some of the pressure for an additional fiscal tightening in next week’s Budget. But we don’t yet know quite what the new Government’s fiscal …
14th June 2010
This week’s pronouncements by the newly created Office for Budget Responsibility (OBR) could set a gloomy backdrop for the emergency Budget due in just over a week’s time. For a start, the OBR is likely to revise down the GDP growth forecasts used in the …
Today’s UK data contained mixed news on the inflation outlook, with easing cost pressures contrasting with rising inflation expectations. We still place little weight on inflation expectations as an indicator of future inflation and continue to think that …
11th June 2010
10th June 2010
April’s trade figures suggested that the external sector is still in no position to offset the effects of the fiscal squeeze that is now almost upon us. … UK Trade …
9th June 2010
The Canadian experience of the mid-1990s has been taken by many as evidence that the UK’s large government deficit can be brought under control fairly easily and without undermining the broader economy. However, a closer look is less reassuring. … UK …
8th June 2010
With public sector job cuts looming, the outlook for employment hinges on whether or not hiring in the sector picks up pace. While some recent indicators of employment intentions have been encouraging, we still find it hard to envisage anything but a …
7th June 2010
Cracks already seem to be appearing in the recovery on the services side of the economy. Admittedly, overall GDP growth in the second quarter could still prove to be fairly reasonable, in part due to the more robust recovery in the industrial sector. But …
The further rise in CPI inflation in April – which triggered another letter from the Governor to the Chancellor – prompted claims that the MPC is being too sanguine about the inflation outlook. But we still think that the MPC is right to expect inflation …
4th June 2010
The contradictory messages offered by the Halifax and Nationwide house price data make it almost impossible to draw clear conclusions about the health of the market. But, at the very least, May’s drop in the Halifax index highlights the fragility of the …
The contradictory messages offered by the Halifax and Nationwide house pric data make it almost impossible to draw clear conclusions about the health of the market. But, at the very least, May’s drop in the Halifax index highlights the fragility of the …
The Monetary Policy Committee (MPC) appears, more than ever, to be in wait and see mode. A number of uncertainties – such as the severity of the upcoming fiscal squeeze and the impact of recent events in the euro-zone on the UK – argue for keeping policy …
3rd June 2010
May’s UK CIPS/Markit report on services provided further evidence that the recovery in the biggest part of the economy is struggling to pick up pace. … UK CIPS/Markit Report on Services …
It is still early days, but our prediction last month that April would be the high water mark for house price inflation appears to have been borne out. For now, house prices continue to rise, but easing supply shortages, overvaluation and, of course, the …
The broad money supply has finally started to grow at the rates the MPC was aiming for when it began its policy of quantitative easing (QE). However, we are yet to see a decent pick-up in bank lending. … Monetary Indicators Monitor …
2nd June 2010
The latest rise in mortgage approvals for house purchase cannot disguise the bigger picture of a lending market that is depressed. The subdued picture for net lending might also mean that anyone hoping for a further easing in mortgage credit conditions …
