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The latest consumer prices figures showed that CPI inflation turned negative again in September. Although the current period of negative inflation should prove to be short lived and shallow, inflation looks set to hover around zero for most of the rest of …
22nd October 2015
Following a feeble performance in previous months, the renewed vigour in the pace of UK retail spending in September might help to stop overall GDP growth slowing too much in Q3. … Retail Sales …
September’s UK public finance figures suggested that the downward trend in borrowing is back on track after a brief wobble last month. Admittedly, it might still be a struggle to meet the OBR’s forecast for this year. But looking ahead, our forecasts for …
21st October 2015
Chancellor George Osborne was last week able to pass his new “fiscal charter”, forcing current and future governments to run a budget surplus during “normal times”. But the Chancellor may come to regret tying his hands and it dashes hopes that he may …
16th October 2015
The latest labour market statistics confirmed that the jobs recovery is back on track after the dip in employment in the spring. Meanwhile, the easing in pay growth has further reduced the case for a rate hike. … Labour market data …
14th October 2015
Deflation returned to the UK in September. Although it is likely to be another very brief and shallow affair, this clearly puts the MPC under even less pressure than before to raise interest rates. … Consumer Prices & Producer Prices …
13th October 2015
Although the strength of September’s BRC Retail Sales Monitor reflects some temporary factors, the underlying picture is good too. Robust earnings growth and high confidence should ensure the recovery in consumer spending remains strong. … BRC Retail …
It is likely that CPI inflation turned negative in September, and should remain close to zero for most of the rest of this year. However, as weak price pressures are being driven largely by lower energy prices rather than domestic economic weakness, …
9th October 2015
A raft of gloomy survey data has fuelled fears that the UK’s economic recovery is running out of steam. There are some indications that quarterly GDP growth will moderate from 0.7% in Q2 to 0.5% or so in Q3 – a fairly respectable figure, but certainly not …
August’s trade and construction figures provided further signs that the UK’s economic recovery lost some pace in Q3, and remained unbalanced. However, we remain confident that the recovery will regain some momentum soon. … Trade & Construction Output …
Markets expectations for the timing of the first hike in UK interest rates have moved significantly over the past month or so. While global market uncertainty in August had meant that markets were already expecting the MPC to hold off from hiking rates …
8th October 2015
The MPC’s decision to keep interest rates unchanged at 0.5% this month would have been an easy one given the recent softening in both domestic and global economic news. While financial markets have probably gone too far in pushing back expectations of the …
While we think that the overall UK economy would do well either inside or outside the European Union, a Brexit could still have some significant implications for the devolved regions – most obviously if it causes Scotland to think once again about going …
7th October 2015
August’s UK industrial production figures were surprisingly good, although they are not enough to have stopped the overall economic recovery from slowing in the third quarter. … Industrial Production …
The latest business surveys made for dismal reading. Indeed, the average level of the economy-wide Markit/CIPS composite PMI over Q3 as a whole points to quarterly growth in GDP of just 0.5%, following Q2’s 0.7% expansion. However, we doubt that this is …
6th October 2015
While the weak tone of the Markit/CIPS services survey in September brought more evidence of a soft end to Q3, we doubt that the economy is on the cusp of a renewed slowdown. … Markit/CIPS Report on Services …
5th October 2015
The economic picture is a little more nuanced than the seemingly relentless barrage of good news last week might have suggested. But the upshot is that we are still feeling pretty good about the outlook for the UK. The recovery has been stronger than …
2nd October 2015
The Monetary Policy Committee (MPC) does not seem too concerned by risks from China, while the recent pick-up in wage growth will worry the hawks on the Committee. Indeed, markets have probably gone too far in again pushing back expectations of a hike to …
1st October 2015
September’s Markit/CIPS report on manufacturing provided further evidence that the economic recovery is extremely dependent on the services sector at present. … Markit/CIPS Report on Manuf. …
The Quarterly National Accounts confirmed that the economic recovery maintained a strong pace in Q2. And although the latest business surveys suggest that growth may have moderated in Q3, we expect this to be only temporary. … National Accounts & Balance …
30th September 2015
The weaker-than-expected tone of September’s GfK consumer confidence survey does little to alter the view that consumer spending growth should maintain a healthy degree of momentum over the coming quarters. … GfK/NOP Consumer Confidence …
It is generally assumed that a UK exit from the EU would lead to a sharp drop in migration, reducing the pool of labour and undermining economic growth. However, a Brexit could lead to a more sensible immigration policy based on skills, rather than …
29th September 2015
Growth in household borrowing strengthened in August. Even so, there is little to suggest that brisk consumer spending has been founded on an unsustainable increase in credit. … Household Borrowing Monitor …
Last week’s public finance figures suggested that deficit reduction has hit a roadblock. But the path of reduction has hardly been a completely smooth one so far. And the strong economic recovery in recent months is yet to feed through fully to tax …
25th September 2015
A British exit from the EU would probably hurt the City in the short term, but it would not spelldisaster. The City’s competitive advantage is founded on more than just unfettered access to thesingle market. And an EU exit would enable the UK to broker …
24th September 2015
August’s public borrowing figures brought the recent run of good news on the public finances to an abrupt end. That said, hopefully this will just be a temporary blip, as tax receipts should be feeling the benefits of the recent strength of the economic …
22nd September 2015
The UK Government could save about £10bn per year on its contributions to the EU’s budget if it left the EU. But a Brexit would not need to create much economic disruption to offset these savings. What’s more, the Government might still have to make some …
21st September 2015
Although the US Fed kept interest rates on Thursday, a rate rise across the pond is not far away. And on the face of it, the pick-up in UK pay growth revealed last week suggested that the Bank of England might not actually be that far off hiking either. …
18th September 2015
Whilst a British exit from the EU may cause the UK to lose out on some foreign direct investment (FDI), access to the single market is not the only reason that firms invest in the UK. Accordingly, we still think that the UK would remain a haven for FDI …
Households are continuing to see substantial increases in their purchasing power. Annual growth in average weekly earnings (excluding bonuses) picked up from 2.8% to 3.2% in July, well above that months near zero-rate of CPI inflation. And the UK looks …
August’s retail sales figures showed that the pace of spending growth on the high street has remained fairly feeble so far this quarter. But we doubt that this signals a more widespread slowdown in the consumer recovery. … Retail Sales …
17th September 2015
The latest labour market statistics confirmed that the recent slowdown in the pace of the jobs recovery was only temporary. However, we don’t think that this will prompt the MPC to hike rates soon. … Labour market data …
16th September 2015
Concerns have been mounting about the impact of the introduction of the National Living Wage (NLW) in April next year, with companies such as Next and Whitbread warning that they will have to put up prices to compensate for higher wage rates. We continue …
15th September 2015
UK inflation is still bouncing around zero and is likely to remain there for most of the rest of this year. This period of virtually no inflation is a good thing for the UK, as it is giving a welcome boost to households’ spending power. … Consumer Prices …
Even if the US Fed holds fire this week, US interest rates will be rising soon – and, in our view, quicker than markets expect. Turning points in UK monetary policy are often close to US ones. But there are good reasons, such as the bigger fiscal …
11th September 2015
We expect deflation to have returned in August; indeed, inflation is likely to remain below zero for most of the rest of this year. But it is not something to worry about as its main effect will be to boost households’ real incomes. … Deflation Watch: …
Recent turmoil in financial markets has seen UK interest rate expectations go on something of a rollercoaster ride recently. It wasn’t all that long ago that a rate hike this year still looked a possibility. But this appears to have been blown out of the …
10th September 2015
Although the MPC kept interest rates unchanged at 0.5% today, it left its options open – saying that recent events had not altered its central view for the UK economy, while conceding an increase in downside risks to global activity that merited …
July’s industrial production and trade figures highlight that the strength of the pound and weakness in demand in key export markets held back the recovery in the manufacturing sector at the beginning of the third quarter. … Industrial Production & …
9th September 2015
On the face of it, August’s weak BRC Retail Sales Monitor may add to concerns that the economy has lost a bit of steam in the third quarter. However, the underlying picture is not as weak as it looks. … BRC Retail Sales Monitor …
8th September 2015
If the polls are anything to go by, left-leaning Jeremy Corbyn will be elected as the next leader of the Labour Party on 12 th of September. This has prompted a heated debate over his economic policies – so called “Corbynomics”. “People’s QE” in …
4th September 2015
The UK economy fired on all cylinders in Q2, with investment and net trade both providing considerable support to GDP growth. However, exports look set for a relapse soon. … Resurgence in exports unlikely to …
3rd September 2015
Last month’s MPC minutes and Inflation Report suggested that the Committee was in less of a hurry to raise rates than many had thought. And the recent market turmoil and commodity price falls are only likely to encourage the MPC to hold fire for a while …
The fall in August’s Markit/CIPS report on services will add to concerns about the sustainability of the recovery following the deterioration in the manufacturing survey already released. But we doubt the economy is on the cusp of a slowdown and the big …
July’s money and credit figures showed a further rise in lending to households and the housing market picking up pace. Even so, there is little to suggest that the strength in consumer spending has been founded on an unsustainable increase in credit. As …
1st September 2015
August’s Markit/CIPS report on manufacturing showed that the strong pound is crimping exporters and so suggests that the major support net trade provided to GDP growth in Q2 will be a blip. But there was better news on bank lending. … Markit/CIPS Report …
Turbulence in financial markets once again overshadowed some positive economic developments on the domestic front last week. Indeed, Q2’s second estimate of GDP showed that the recovery in household spending has maintained a healthy degree of momentum, …
28th August 2015
The second estimate of Q2 GDP showed that the recovery received considerable support from net trade. The pound’s recent appreciation suggests that this support is unlikely to last. But with households’ real incomes set to be boosted by another spell of …
The very strong reading of the GfK consumer confidence survey in August provides reassurance that recent softer growth in retail sales is likely to be just temporary. … GfK/NOP Consumer Confidence …
For many years we have argued that UK markets were pricing in too early and too fast a tightening of monetary policy. But now, markets, which currently expect the MPC to leave interest rates on hold for at least another year and to take more than a decade …
27th August 2015
