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Having fallen since mid-November, trade-weighted sterling has recovered a little over the past month. But with the pound still far below its previous peak, and demand for protection against further falls in sterling high, there’s little evidence that …
12th May 2016
In its latest Inflation Report, the MPC sounded a stark warning about the potential adverse effects on the economy of a Brexit, but nonetheless continued to indicate that, if the UK votes to stay in the EU, markets’ interest rate expectations are too low. …
This morning’s ONS release, showing there has been a large recent rise in short-term EU immigration, will probably lead to exaggerated claims about the UK needing to regain control of its borders. While we think claims that EU immigration has been …
Disappointing official industrial figures in March confirmed that the sector has slipped back into recession, leaving GDP growth precariously unbalanced. … Industrial Production …
11th May 2016
Following two months of weak official retail sales figures, April’s BRC sales data dented hopes that the weakness would prove temporary. Nonetheless, we still think that talk of a marked collapse in consumer spending is wide of the mark. … BRC Retail …
10th May 2016
Despite the improvement in today’s trade figures for March, net trade still appears to still be dragging on GDP growth. And trade is set to make a larger negative contribution to the current account balance in Q1 than in Q4. … Trade …
The gloomy tone of this week’s PMI data provided further concrete evidence that the uncertainty generated ahead of the EU referendum is weighing on activity. As with last week’s GDP data, other factors were probably at play too. But overall , it’s clear …
6th May 2016
The economy seems to be on a worrying downward trajectory. But if activity were about to fall off a cliff, we might expect forward-looking measures of confidence and expectations to be tumbling and this does not seem to be the case. Although there was …
Recent data have brought more concrete signs that uncertainty ahead of the EU referendum on 23rd June is starting to weigh on the economy . GDP in Q1 grew by a modest 0.4% on the quarter and the Markit/CIPS surveys point to a further slowdown in Q2. …
5th May 2016
A policy change looks very unlikely this month. Not only will the MPC not want to rock the boat ahead of the EU referendum, but the economy still does not look strong enough to warrant a tightening of policy. But if the UK votes to stay in the EU, we …
The fall in the Markit/CIPS services survey in April suggests that economic growth will soften further in the near term, perhaps until uncertainty surrounding the EU referendum is resolved. … Markit/CIPS Report on Services …
We doubt that the MPC will model separate ‘remain’ and ‘leave’ scenarios in its Inflation Report next week. But Brexit uncertainty will still affect its forecasts via its assumptions about the exchange rate and interest rates. As this uncertainty will …
4th May 2016
The latest Markit/CIPS manufacturing survey suggested that the sector began Q2 on a poor footing and will increase fears that the economic recovery will slow further inQ2 as the EU referendum nears. Nonetheless, we remain optimistic that manufacturers’ …
3rd May 2016
GDP data released this week suggests that Brexit uncertainty probably weighed on growth in Q1. But other factors were at play too. And recent surveys generally indicate that the impact of Brexit uncertainty on economic activity, while negative, may …
29th April 2016
The retail sector’s productivity performance has been better than it has often been given credit for. That said, with the sector particularly hard-hit by the new National Living Wage, boosting productivity even further will be essential in order for …
Softening activity indicators and the moderation in quarterly GDP growth from 0.6% in Q4 to 0.4% in Q1 have fuelled a number of warnings, notably from Chancellor George Osborne and the OECD, that the threat of leaving the EU has been weighing on …
March’s household borrowing figures will only have added to concerns that the consumer recovery is built on unsustainably-high rates of unsecured lending growth. But there are reasons to think that consumer credit growth is not yet a major threat to …
While consumer confidence fell more sharply than expected in April, we would caution against reading too much into one month’s data. What’s more, April’s reading was still within the top 30% of all readings since the survey was first conducted in 1974, …
Sterling’s recent rally as expectations of a Brexit have fallen suggests that the pound will rise further if the UK votes to remain in the EU. But there are reasons why the rally is unlikely to last. … Is sterling’s recent rally here to …
28th April 2016
As had been expected, today’s GDP figures confirmed that the economic recovery cooled in Q1. But we wouldn’t wholly blame the slowdown on uncertainty ahead of the EU referendum given jitters in financial markets and concerns about the global recovery at …
27th April 2016
Following the poor official retail sales figures in March, April’s CBI Distributive Trades Survey proved very disappointing reading. But while Brexit and other uncertainties may currently be weighing on spending a little, we remain upbeat about the …
The CBI Industrial Trends Survey for April & Q2 showed a slight improvement in manufacturing activity over the past month and firms are still optimistic about the future, despite the risks surrounding the impending EU referendum. … CBI Industrial Trends …
25th April 2016
With only two months left until the referendum, we will be publishing a weekly Brexit Watch to help clients keep track of all the latest developments. Evidence that the economy is beginning to suffer has grown over the past week, although it is hard to …
22nd April 2016
The fall in the household saving ratio to a record low in 2015 might suggest that recent robust consumer spending growth is unsustainable and that the saving ratio will need to rise again. But the fall in household saving has been overstated by …
It is possible that an out vote in the EU referendum could push up mortgage interest rates. But if it did, we suspect any rise would be modest and that the drivers of that rise would not be those outlined by the Chancellor. … Gilt yields to rise …
At the heart of most of last week’s wealth of Brexit -related publications and comments was the issue of what will happen to trade if the UK votes to leave. As with pretty much all aspects of the Brexit debate, it is wise to take both sides’ claims …
Although retail spending has come off the boil in the past couple of months, the consumer recovery is on the whole holding up reasonably well. Indeed, there are few signs that Brexit uncertainty is having much of an effect, with consumer confidence still …
21st April 2016
March’s fall in retail sales added to other evidence indicating that the economic recovery has slowed since the start of the year. While there was better news on public borrowing, the OBR’s full-year forecast has been missed. … Public Finances & Retail …
Today’s UK labour market data added to recent signs that the economy slowed at the start of 2016. Accordingly, interest rates look set to be on hold for a while yet. … Labour Market Data …
20th April 2016
The report by HM Treasury, published today, on the long-run economic impact of a Brexit, paints a fairly gloomy picture. However, this is just another in what is an extensive and wide-ranging set of estimates, and rests on some pretty pessimistic …
18th April 2016
It is generally accepted that the main channel through which uncertainty ahead of the EU referendum will hit the economy is the negative impact on business investment. But on the whole, last week’s Bank of England Credit Conditions Survey gave some …
15th April 2016
The MPC’s unanimous decision to leave Bank Rate on hold at 0.5% today was unsurprising given recent signs of a slowdown in economic activity and heightened uncertainty surrounding the EU referendum. These factors will contribute to the MPC leaving rates …
14th April 2016
Over the past month, UK equities have continued to recover, while corporate bond spreads have narrowed, bolstered by the general improvement in sentiment in global markets after the turmoil around the start of the year. Nonetheless, despite this …
13th April 2016
March’s consumer prices release showed the economy’s movement away from deflation resumed after stalling in February. … Consumer Prices & Producer Prices …
12th April 2016
March’s BRC sales figures showed surprisingly weak retail sales growth. While we don’t think this points to a sharp slowdown in consumer spending, it does support the view that this year may not be quite as strong as the last for consumers. … BRC Retail …
Last week’s Markit/CIPS surveys pointed to a slowdown in GDP growth in the first quarter, a picture supported by other activity surveys. But while the economy seems to be going through a slightly sluggish patch, let’s not get too worried just yet. After …
8th April 2016
February’s trade and industrial production figures add to the evidence that the economy has made an uninspiring start to the year and suggest that growth remains heavily unbalanced. … Industrial Production & Trade …
Weaker-than-anticipated inflation, lingering uncertainty in global financial markets and concerns about the impact that the EU referendum is having on the real economy means that this month’s interest decision is likely to be another unanimous one to keep …
7th April 2016
We have already written about how Brexit uncertainty is affecting financial markets, with the pound in particular coming under pressure. But it is harder to find concrete evidence that the looming EU referendum is having a big adverse impact on the …
6th April 2016
While the latest National Accounts showed that the pace of the economic recovery was stronger in Q4 than previously estimated, it highlighted that the economy’s imbalances remain large and have grown worse. Admittedly, the drag on GDP from net trade …
5th April 2016
A rebound in the Markit/CIPS services survey in March suggests that the sector’s recovery is getting back on track, following a poor February. However, the survey is still consistent with a slowdown in GDP growth in Q1. … Markit/CIPS Report on Services …
The increase in quarterly GDP growth from 0.4% in Q3 to an around-trend rate of 0.6% in Q4 suggests that the recovery has regained some momentum. There are factors that should stop growth from accelerating further in the near term, but none of these …
1st April 2016
Another dismal UK Markit/CIPS manufacturing survey suggests that the sector is still struggling to put its troubles last year behind it. But the manufacturing sector’s prospects should begin to look up as the year progresses. … Markit/CIPS Report on …
Today’s data showing that the UK’s current account deficit hit a record high will reinforce fears that the EU referendum could trigger a balance of payments crisis. If funding inflows dried up, the pound would drop sharply – but this could aid the long …
31st March 2016
February’s household borrowing figures will have done nothing to ease concerns regarding rapid unsecured credit growth and the sustainability of the consumer recovery. But we do not yet consider the current expansion of consumer credit a major threat to …
The Quarterly National Accounts showed the recovery regained a little pace at the end of 2015 but this partly contributed to growing imbalances in the economy. … National Accounts & Balance of Payments …
Consumer confidence held steady in March at a level a little below last year’s average. But with confidence still high by past standards, a sharp slowdown in household spending growth is not likely to be in store. … GfK/NOP Consumer Confidence …
Despite the recent recovery in most UK markets, there is still evidence that they are bracing themselves for a possible Brexit. Accordingly, we think there is scope for markets to move significantly further when the result of the vote becomes known on …
30th March 2016
The relatively timid measures announced by the Bank of England’s Financial Policy Committee (FPC) today underlined that it is set to tread cautiously when implementing macroprudential policy. Accordingly, we doubt that the FPC’s actions will knock the …
29th March 2016
