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Sterling has held up well over the past month, despite a significant majority of MPs voting in favour of (and without amendments) the Article 50 bill which gives the Government the power to begin the EU negotiations when it chooses. Moreover, sterling’s …
21st February 2017
February’s CBI Industrial Trends Survey added to the evidence that the manufacturing sector is getting back onto its feet. This should help prevent GDP growth from losing too much momentum in the quarters ahead. … CBI Industrial Trends Survey …
20th February 2017
While the possibility of Parliamentary “ping-pong” suggests that a triggering of Article 50 at the EU summit on 9th & 10th March is unlikely, the Prime Minister’s self-imposed deadline of the end of March should still be met. … Brexit Watch: Parliamentary …
17th February 2017
There are growing signs that the post-referendum strength in consumer spending is beginning to fade. With CPI inflation set to pick up to around 3% by the end of this year, growth in households’ real wages is likely to slow considerably which could …
Last week’s labour market and inflation figures have fueled concerns that the impact of rising inflation on real earnings will cause a significant slowdown in consumer spending growth. Indeed, rising inflation and a fall in annual average earnings growth …
January’s surprise fall in the official measure of retail sales volumes has brought the recent run of resilient economic news to an abrupt end and suggests that the hit to consumer spending growth from higher inflation is starting to materialise. … Retail …
The latest data suggest that while the labour market has lost some momentum recently, it has held up fairly well in the face of Brexit uncertainty. However, real wage growth has started to become squeezed. … Labour Market …
15th February 2017
CPI inflation took another step up in January and looks set to breach the MPC’s 2% target next month. However, we don’t think that the forthcoming rise will panic the MPC into hiking interest rates much earlier than markets expect. … Consumer Prices & …
14th February 2017
The Government got another step closer to being able to trigger Article 50 before its self-imposed deadline of 31st March. Meanwhile, the latest data suggest that the post referendum drop in the pound may be helping to rebalance the economy towards …
10th February 2017
A robust rise in manufacturing activity at the end of 2016 and in the output balance of the Markit/CIPS manufacturing survey have raised hopes that the sector is getting back onto its feet. Admittedly, the sector faces a number of headwinds, not least …
Today’s economic activity data added to other evidence suggesting that the economy maintained a significant amount of momentum at the end of 2016 and implies that GDP growth is becoming more balanced. … Industrial Production, Construction & Trade …
January’s BRC Retail Sales Monitor echoed other evidence that there has been some moderation in consumer spending growth. And with higher inflation set to slow the pace of real income gains, spending growth is likely to ease further over 2017. … BRC …
7th February 2017
Following a strong end to 2016, the economy appears to have carried a decent amount of momentum over into 2017. Despite a slight fall in the Markit/CIPS all-sector PMI in January, it is still at a level consistent with quarterly GDP growth of around 0.5%. …
6th February 2017
A key reason why the UK economy has proved unexpectedly resilient since the vote for Brexit is that the resulting uncertainty has not had the negative effects that many had anticipated. And there are reasons to think that the dog will remain quiet. … …
The Government moved one step closer to triggering Article 50 this week after MPs overwhelmingly voted in favour of its bill. Meanwhile, the latest economic data suggest that the economy has maintained a decent amount of momentum around the turn of the …
3rd February 2017
Last week’s Inflation Report saw the Monetary Policy Committee (MPC) seemingly abandon “Project Fear” in favour of “Project Optimism”. Indeed, the MPC seemed upbeat on growth prospects and relaxed about above-target inflation. But not all members of the …
January’s Markit/CIPS report on services suggests that the economy lost a little bit of momentum at the start of 2017, following the strong end to 2016. However, the PMI surveys added to signs that GDP growth might be more balanced in 2017. … Markit/CIPS …
The first Bank of England “Super Thursday” of 2017 saw the MPC Minutes and Inflation Report strike a cautiously-optimistic tone. That said, while the economy appears to be coping with Brexit uncertainty well so far, we think the start of the monetary …
2nd February 2017
Although price pressures are building rapidly, January’s Markit/CIPS manufacturing survey suggests the sector started the year on a stronger footing. … Markit/CIPS Report on Manuf. …
1st February 2017
With all eyes on sterling, one somewhat overlooked development over the past month has been the increase in markets’ expectations for official interest rates. Indeed, on the basis of overnight indexed swap rates (OIS), the MPC is now expected to reverse …
31st January 2017
December’s household borrowing figures showed that demand has continued to return to the housing market, following a lull around the referendum, but that consumer credit growth slowed for the first time in six months. Admittedly, the rise in new mortgage …
Despite concerns about the economic outlook, consumer confidence strengthened in January and the details of the survey provide another reason to think that the likely slowdown in spending growth this year won’t be too severe. … GfK/NOP Consumer Confidence …
While the Supreme Court decision won’t prevent Brexit from happening, it has perhaps increased the chance that Theresa May’s timeline for triggering Article 50 will slip and/or that there could be more Parliamentary scrutiny. Meanwhile, the announcement …
27th January 2017
The solid 0.6% expansion in UK GDP in the fourth quarter of last year provided further evidence that the vote to leave the European Union has so far had little discernible adverse effect on the UK economy, in stark contrast to the Treasury’s …
The Monetary Policy Committee (MPC) faces a less challenging trade-off between supporting the economy and controlling inflation. It will probably upgrade the growth projections in its Inflation Report. But the recent rebound in sterling should result in a …
26th January 2017
Following December’s disappointing official retail sales result, January’s CBI Distributive Trades Survey suggests that the sector started the year on a poor footing. However, while we think that consumer spending growth is set to ease in 2017, it …
The strong end to last year provides plenty of momentum heading into 2017. And while growth looks set to ease this year, the beneficial effects of the fall in the pound should help to ensure that the slowdown won’t be too severe. … Preliminary estimate of …
January’s CBI Industrial Trends Survey showed that the manufacturing sector has carried a decent amount of momentum into the New Year. … CBI Industrial Trends Survey …
25th January 2017
The improvement in the public finances in December means that borrowing in the current fiscal year should be slightly below the OBR’s November forecasts. And we think stronger GDP growth will result in more rapid improvement further ahead. … Public …
24th January 2017
Today’s decision by the Supreme Court to uphold the High Court’s ruling that the Government must have Parliament’s approval before triggering Article 50 is still significant. In fact, arguably, the vote matters more than the vote that Theresa May granted …
The unveiling of the Government’s broad plans for Brexit helped to drive the pound higher this week. However, this probably largely reflects a slight reduction in uncertainty, rather than optimism about the content of the plans themselves. … Brexit Watch: …
20th January 2017
Household spending has remained remarkably robust, despite Brexit uncertainty. Admittedly, this looks unlikely to last. After all, while wage growth is picking up, inflation is on the rise too. Indeed, CPI inflation looks set to pick up to around 3% by …
While the Monetary Policy Committee (MPC) has stated that it is willing to look through a period of exchange-rate driven above-target inflation, one of its conditions is that there are no significant second-round effects on domestic cost pressures. On the …
December’s disappointing retail sales figures suggested that shoppers lost some festive cheer at the end of last year. And 2017 is likely to see a further slowdown in spending, as inflation continues to rise and squeezes growth in real incomes. … Retail …
The latest data suggest that while the labour market has lost some of its shine, it remains resilient despite Brexit uncertainty. … Labour Market …
18th January 2017
Today’s speech by PM Theresa May, which set out the Government’s broad objectives ahead of the formal negotiations with the EU, contained little more than what was widely expected. Nonetheless, it did provide at least a little more certainty about the …
17th January 2017
While December’s rise in CPI inflation was greater than expected, the increase was driven by components that shouldn’t have too much of an effect on the MPC’s stance on monetary policy. … Consumer Prices & Producer Prices …
The pound has suffered another bumpy ride this week, as concerns about the economic impact of a “hard Brexit” have lingered. That said, some of the positive impacts of the lower exchange rate were evident in the buoyant stock market, and the latest …
13th January 2017
The recent strong growth of unsecured household borrowing has prompted concerns that, far from snapping their wallets shut in response to Brexit worries, UK consumers have embarked on another credit-fuelled spending boom. But broader forms of borrowing …
The latest deluge of economic data as part of the ONS’ new “Theme Days” added to other evidence suggesting that the economy maintained a decent amount of momentum in the fourth quarter, and that growth has become better balanced. … Industrial Production, …
11th January 2017
While the latest fall in the pound could potentially push inflation higher than otherwise, it should strengthen the already considerable beneficial effects of a weaker currency too. … Still no need to panic about the …
10th January 2017
December’s BRC Retail Sales Monitor revealed a strong end to the year for consumer spending. But a slowdown in spending growth looks to be in prospect this year, as higher inflation starts to weigh on the growth in households’ real incomes. … BRC Retail …
The very beginning of 2017 has not been shy of Brexit-related drama, although none of it appears to have particularly rattled financial markets. This probably reflects the fact that the latest data has provided further evidence that economic growth barely …
6th January 2017
Revisions from the ONS mean that quarterly GDP growth in Q3 is now estimated to have been 0.6% – the same as in Q2. What’s more, business surveys suggest that this pace was maintained in Q4. Admittedly, the surveys also brought more evidence of …
While we have been considerably more upbeat than other forecasters about the outlook for the UK economy in 2017, the positive tone of recent indicators suggests that even we might have been a bit too pessimistic. Last week’s PMI surveys for December …
December’s Markit/CIPS report on services added to the evidence that the economy will turn in another strong performance in Q4 and hasn’t lost any momentum since the vote to leave the EU. That said, the survey highlighted the inflationary pressures …
5th January 2017
November’s household borrowing figures showed that borrowing growth remains strong, despite the Brexit vote, and that the housing market continues to regain its momentum. Admittedly, the small rise in mortgage approvals for new house purchase from 67,371 …
4th January 2017
The significant improvement in the December Markit/CIPS manufacturing survey’s main balances provides more evidence that the sector’s post referendum weakness will prove short-lived. This should help prevent GDP growth from losing too much momentum in the …
3rd January 2017
The latest Quarterly National Accounts provided further reasons to think that recent rates of spending growth will not be sustained next year. That said, we do not anticipate that a dramatic slowdown in spending will occur either. … Strong spending rests …
23rd December 2016
There are indications that the Government may be moving away from the recent “soft” Brexit rhetoric this week. But given the growing signs that it is also considering some sort of “transitional” arrangement for leaving the EU, this suggests that Brexit is …
