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It was little surprise that the leaders of the EU27 this week decided that “sufficient progress” on the withdrawal issues has not yet been achieved. But there were encouraging signs that this point could be reached in December, which would allow talks to …
20th October 2017
While it is far from a done deal, there was nothing in the comments made by MPC members this week, or the latest economic data releases, to make us alter our view that the MPC will press ahead and raise interest rates for the first time in a decade on …
The penultimate set of public finances before the Autumn Budget on 22nd November provided some welcome good news for the Chancellor. However, the likely changes to the OBR’s forecasts could limit the scope for any big giveaways in the near term. … Public …
There can be no question that consumer spending growth has suffered as nominal pay growth has lagged behind the ongoing currency-driven bout of higher inflation. But some of the slowdown in consumer spending growth should be reversed in Q3 as car sales …
19th October 2017
Although September’s retail sales figures were far weaker than expected, growth still maintained a fairly reasonable pace over Q3 as a whole. As a result, we doubt that today’s figures will dissuade the MPC from hiking interest rates on November 2nd. … …
Employment growth came off the boil a little in August. But with surveys of hiring suggesting that this will be a temporary development while wage growth more-or-less maintained its recent pace, we think the Monetary Policy Committee is still on course …
18th October 2017
The rise in CPI inflation in September took it close to its eventual peak and supports our view that the Monetary Policy Committee (MPC) will press ahead and raise interest rates in November. … Consumer Prices & Producer …
17th October 2017
The fifth round of Brexit negotiations passed without much progress being made towards a withdrawal agreement, while the Government appears to have stepped up its plans somewhat for coping with a “no deal” scenario. However, doubts that the public still …
13th October 2017
The strong performance of the labour market since the financial crisis has left only limited scope for further increases in employment to continue to support GDP growth. As such, productivity growth will be a key determinant of the pace of future economic …
The deluge of official data for August provided some reassurances that the economy has not lost pace in the third quarter and suggested that growth could even nudge up a touch. However, it also showed that the drop in the pound is still failing to boost …
10th October 2017
Today’s BRC survey suggested that the resilience of retail spending continued in September despite above-target inflation eating further into consumers’ purchasing power. … BRC Retail Sales Monitor …
The prospect of a renewed Conservative Party leadership bid could have a de-stabilising effect on negotiations next week and, if it does happen, could have a material impact on the sort of Brexit that the UK attempts to negotiate. … Renewed leadership bid …
6th October 2017
This week’s PMI surveys were undeniably disappointing and have led some to question whether this is the start of a more pronounced slowdown. However, there are two reasons why we think that concerns about a further slowdown may be overdone. First, we …
The latest evidence suggests that the economy has maintained a fairly modest pace in Q3. Indeed, the Markit/CIPS all-sector PMI is consistent, on the basis of past form, with quarterly GDP growth of 0.3% or so. Admittedly, the manufacturing sector looks …
5th October 2017
The rise in September’s services sector PMI will help to assuage fears that the economy is losing momentum, but it suggests that growth struggled to pick up pace in Q3. … Markit/CIPS Services PMI …
4th October 2017
Despite the weaker PMI survey in September, the manufacturing sector still looks likely to have put in a solid performance over the third quarter as a whole. … Markit/CIPS Manufacturing PMI …
2nd October 2017
The latest Quarterly National Accounts painted households’ finances in a much better light, supporting our view that consumers will continue to ride out the real pay squeeze fairly well. … Consumers’ finances more …
29th September 2017
While Theresa May’s speech in Florence appears to have had a positive effect on the Brexit negotiations, it still looks unlikely that “sufficient progress” on the withdrawal agreement will be made by October’s European Council meeting, barring some …
Private non-financial companies are unlikely to have any difficulty coping with increases in interest costs ahead. First, the scale of the increase in Bank Rate is set to be fairly trivial by past standards. Second, firms’ profitability has recovered to …
August’s household borrowing figures provide another reason to think that consumer spending growth won’t slow too sharply ahead. But the figures will do little to assuage concerns about household debt. … Household Borrowing Monitor …
The most interesting element of the National Accounts was the sweeping revisions to the data, including the implementation of the ONS’ annual methodological overhaul, which suggests households’ financial positions are more robust than previously thought. …
September’s GfK Consumer Confidence survey continues the recent run of more encouraging news on the consumer sector, supporting our view that the slowdown in spending growth won’t be too severe. … GfK/NOP Consumer …
Mortgage rates are set to move back above 3% by the end of 2019. On its own, a rise in mortgage interest rates on that scale is unlikely to trigger another downturn in house prices. But it will act as a brake on any recovery in mortgage lending and …
28th September 2017
While we wouldn’t place too much weight on the markedly-strong tone of September’s CBI Distributive Trades survey, it nonetheless supports our view that consumer spending growth probably picked up a bit of pace in Q3, after slowing considerably in the …
27th September 2017
The prospect of the first rise in interest rates in a decade has raised concerns about the impact on the already beleaguered consumer. Indeed, there is clearly a risk that the sheer shock of the first hike could dent sentiment. But we think there are …
In today’s Statement, the Bank of England’s Financial Policy Committee (FPC) fired a warning shot to banks over consumer credit, suggesting that banks would need to increase the amount of capital they hold by £10bn in order to protect against losses. But …
25th September 2017
Prime Minister Theresa May’s much-hyped Florence speech has probably inched the UK closer to having made “sufficient progress” on the withdrawal phase of the negotiations. However, there are still some key sticking points, and the big picture is that the …
22nd September 2017
The prospect of the first rise in interest rates in a decade has raised concerns about what impact it would have on the already beleaguered consumer. But modest rises in interest rates shouldn’t put a big dent in household incomes. And the real pay …
The continued strength of the CBI Industrial Trends Survey in September suggests that the improvement in the official manufacturing output data in July will continue throughout the third quarter. … CBI Industrial Trends Survey …
August’s public finances figures will come as welcome news to the Chancellor in the lead-up to the Budget on 22nd November and further increases the scope to ease back on austerity a touch. • … Good news for the Chancellor in the lead-up to the …
21st September 2017
There has been little let up in the squeeze on consumers’ finances. But until now, at least, the consumer has been showing impressive resilience, with high-street spending having grown strongly over the last two quarters. Admittedly, growth in retail …
20th September 2017
Today’s retail sales figures indicate that consumers are showing impressive resilience in the face of the real pay squeeze and suggest that talk of the economy losing further momentum has been overdone. … Retail Sales …
The fourth round of negotiations have been delayed by a week until after Theresa May’s forthcoming speech in Florence. Both negotiating teams will be hoping that the Prime Minister endorses a financial settlement, allowing the negotiation to move towards …
15th September 2017
Markets appear to have taken heed of the MPC’s warning this week that interest rates could rise soon. Admittedly, the MPC has talked the talk before and failed to deliver. But this time, there are a number of reasons why the MPC is likely to walk the walk …
We have long argued that investors have been too sanguine about the prospect of a hike in Bank Rate in the near term. But the hawkish tone of the minutes of the MPC’s September meeting surprised even us. Indeed, the revelation that “a majority” of MPC …
The Monetary Policy Committee (MPC) gave a pretty clear signal today that it intends to raise interest rates within the next few months. We now expect a 25bp hike in November. … MPC signals rate hike as soon as …
14th September 2017
The latest labour market figures continued the recent pattern of employment growing strongly and the unemployment rate falling further, but wage growth failing to respond. … Labour Market …
13th September 2017
The pick-up in inflation in August took it close to its eventual peak, although it is likely to provide the more hawkish members of the Monetary Policy Committee (MPC) with ammunition ahead of Thursday’s meeting. … Consumer Prices & Producer Prices …
12th September 2017
A position paper on the EU’s approach to Northern Ireland and accompanying statements by Michel Barnier on Thursday highlighted that the EU and the UK will struggle to agree on how to deal with trade in the region post-Brexit. … Brexit Watch: EU concerned …
8th September 2017
After a disappointing first half of the year, the early evidence suggests that the UK economy has failed to re-accelerate much in the third quarter. But talk of the economy losing more momentum looks overdone. Indeed, there are still some reasons to think …
Today’s flurry of activity data suggests that external-facing sectors are still providing little offset to the consumer slowdown. But there are some signs that net trade could provide more support in the quarters ahead. … Industrial Production, …
The MPC is unlikely to spring any surprises at its meeting on 14th September. However, the economy has performed broadly in line with its expectations. Moreover, the pound has fallen further since the Inflation Report, which will put more upward pressure …
7th September 2017
In contrast to some forecasters who have suggested that the pound could reach parity with the euro before the end of the year, we expect sterling to reverse some of its recent losses against the euro. For a start, we don’t share other forecasters’ …
6th September 2017
The economy looks unlikely to post a significant pick-up in growth in the third quarter. Indeed, the average level of the Markit/CIPS all-sector PMI in July and August is consistent, on the basis of past form, with quarterly GDP growth of around 0.4%. …
New car registrations fell again in August, providing a worrying sign that the sector will be a major drag on overall consumer spending growth in the quarters ahead. … Will car sales stay stuck in …
August’s services PMI suggests that the economy is struggling re-accelerate in the third quarter, after a disappointing first half of the year. However, there are still some good reasons to expect growth to pick up a little pace. … Markit/CIPS Services …
5th September 2017
Following a weak CBI retail sales survey in August, the BRC’s retail sales figures for the same month provide some reassurance that retail spending is continuing to prove resilient to the real pay squeeze. … BRC Retail Sales Monitor …
This week’s third round of negotiations saw some limited progress. But the overriding sense from yesterday’s press conference was that Britain is still seeking to negotiate outside the format imposed by the EU in order to use the financial settlement as …
1st September 2017
The latest business investment figures were undeniably disappointing, with quarterly growth flat-lining in Q2. But this week’s money and credit figures, which showed another strong rise in net finance raised by private non-financial companies in July, …
The broad-based strength of August’s manufacturing PMI survey adds weight to our view that the sector will put the disappointing first half to the year behind it, and will probably provide a decent boost to GDP growth in the second half of the year. … …
