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November’s BRC Retail Sales Monitor supported other evidence suggesting that the start of last month saw strong retail sales growth. But with that growth petering out over the rest of November, underlying growth still looks weak. … BRC Retail Sales …
4th December 2012
Although the Monetary Policy Committee (MPC) voted to halt its quantitative easing (QE) programme in November, it has since turned out that policy is just being loosened in another way, namely via the Chancellor’s raid on the QE fund. And the MPC has …
3rd December 2012
The small improvement in the UK CIPS/Markit manufacturing survey in November did little to change the fundamental picture of a struggling industrial sector. Meanwhile, the first data on the usage of the Funding for Lending Scheme showed that banks …
Attention has quickly turned to what impact Mark Carney’s appointment as Governor of the Bank of England is likely to have on monetary policy. We are not convinced by arguments that he has demonstrated either a hawkish or a dovish bias at the Bank of …
November’s surprise pick-up in consumer confidence supported yesterday’s CBI Distributive Trades survey in suggesting that consumers have perked up a bit. But the foundations for a sustained improvement in consumer spirits are lacking. … GfK/NOP …
30th November 2012
November’s CBI Distributive Trades Survey suggests that the festive period has got off to a good start on the high street. But with pay growth likely to remain weak and unemployment set to rise, retailers shouldn’t necessarily put out the bunting yet. … …
29th November 2012
Household borrowing growth remains pretty weak, although there are tentative signs that the Bank of England’s Funding for Lending Scheme (FLS) is starting to have a positive impact. … Household Borrowing Monitor …
The broad money supply is continuing to grow at a decent pace. But there are question marks over whether that will last now that the MPC has paused its quantitative easing (QE) programme and whether firms and households will spend their higher money …
Mortgage approvals are continuing to rise, helped by a further marginal fall in mortgage rates. But they remain far too low to kick-start a sustained recovery in house prices. … Nationwide House Prices (Nov. 12) & Mortgage Lending (Oct. …
The Bank of England continues to argue that inflation is being kept high by a series of one-off factors. Many of the “idiosyncratic” factors boosting inflation at the moment may prove to be more than temporary. Even so, a case could be made for the MPC …
28th November 2012
While real household spending posted a decent rise in the third quarter, at least half of the increase was due to the Olympics. And with the fourth quarter shaping up to be weak, a sustained recovery in spending looks unlikely until next year. … A …
27th November 2012
GDP is still estimated to have risen by a solid 1% in Q3, but this primarily reflected temporary factors. Evidence is building that activity in Q4 has relapsed. … GDP: Second Estimate & Expenditure Breakdown …
Bank of Canada Governor Mark Carney is well-qualified to manage the Bank of England’s expanded role when he takes over from Mervyn King as Governor of the Bank of England at the end of next June. Nonetheless, he faces new and big challenges ahead. … …
26th November 2012
October’s public finance data suggest that the fiscal position remains weak, with the main problem being on the receipts side. Along with rising inflation, downbeat business surveys and recent signs of a softening in the labour market, the latest data on …
UK asset prices have been undermined by fading expectations of more monetary stimulus and the partial reversal of safe-haven demand as euro-zone concerns have eased. Although a cut in official interest rates now seems unlikely, we continue to expect the …
22nd November 2012
It should not be long until we hear who will replace Sir Mervyn King as Governor of the Bank of England at the end of next June. It is thought that the appointment of a Bank “insider” might just lead to a continuation of the status quo. But the difficult …
21st November 2012
October’s public finance figures – the last before the Autumn Statement in a fortnight’s time – suggested that there is still a significant risk that the Chancellor will break his fiscal rules unless he introduces even more austerity. Meanwhile, the …
The main message from Wednesday’s Inflation Report was that quantitative easing (QE) is still the MPC’s preferred course of action when it comes to giving the economy more stimulus. … QE still at the top of the …
19th November 2012
October’s poor retail sales figures have prompted fears of a disappointing Christmas on the high street. While we doubt that it will be a write-off, we expect consumers to be cautious and retailers might end up having to step up the pace of discounting. … …
16th November 2012
Although real consumer spending probably rose in the third quarter, that could be as good as it gets for a while. … Real pay prospects …
October’s official retail sales figures support the timelier surveys in suggesting that the recovery on the high street is losing momentum ahead of the crucial Christmas shopping season. … Retail Sales (Oct. …
15th November 2012
Although the Bank of England’s latest Inflation Report showed inflation projected to be broadly at its 2% target at the two year policy horizon, Mervyn King’s comments at the press conference suggested that the door remains wide open to more quantitative …
14th November 2012
The latest labour market figures revealed that while employment has continued to grow, the pace of expansion is slowing. And timelier indicators suggest that the labour market’s recent resilience may finally be starting to fade. … Labour Market Data …
October’s rise in CPI inflation from 2.2% to 2.7% provided another explanation for why the Monetary Policy Committee (MPC), which would have seen the headline figures, held back from providing more stimulus last week. However, the rise in inflation is not …
13th November 2012
Some members of the MPC appear to think that they are reaching the limits of how much monetary policy can help the economy. We agree that more gilt purchases might not do a lot of good. But this just means that the Committee should get more imaginative. … …
12th November 2012
The Prime Minister may have been getting ahead of himself when he said a few weeks ago that “the good news will keep on coming”. Although Q3’s GDP figure was strong, the more recent official and survey data have been disappointing. … The shine wears …
UK government bond yields have recently climbed to their highest levels since May. Fading expectations of a cut in official interest rates and further asset purchases from the Monetary Policy Committee (MPC) appear to have been the key driver of the …
9th November 2012
The Government today agreed with the Bank of England to transfer to the Exchequer the excess cash held in the Bank’s quantitative easing (QE) facility. This will leave the published borrowing figures looking healthier in the near-term, but is largely just …
The trade deficit narrowed in September, but the balance has recently been volatile and the underlying picture is one of little improvement. However, there were more encouraging signs in today’s mortgage interest rates data that the Funding for Lending …
The European Commission this week added to warnings that the Chancellor might miss his target for debt as a share of GDP to be falling in 2015/16. One factor influencing whether Mr Osborne decides just to break the rule is how the rating agencies would …
8th November 2012
The MPC’s decision to leave policy on hold today would not have been an easy one and the vote could have been quite close. We think that more policy stimulus will be required in the coming months – the question is whether the Committee feels it has the …
About 1 million households are currently receiving a letter from HMRC setting out how much they will lose from child benefit reforms taking effect in January 2013. While the macroeconomic impact of these reforms will be modest, the overall spending and …
7th November 2012
September’s industrial production figures supported the latest CIPS/Markit activity surveys in suggesting that the economic recovery is quickly losing momentum again. … Industrial Production …
6th November 2012
October’s BRC Retail Sales Monitor provided evidence that, following Q3’s generally positive news from the high street, a retail recovery seems to be fizzling out. … BRC Retail Sales Monitor …
UK banks have now increased their provisions for compensation payments for mis-sold Payment Protection Insurance (PPI) policies to £15bn – equal to 1.5% of annual household incomes. However, we think that the boost to household spending from these payouts …
5th November 2012
It will be a close decision at this week’s Monetary Policy Committee meeting. The latest business surveys suggest that the recovery is still struggling. But other economic data have been more positive, while inflation is likely to pick up again in the …
October’s CIPS/Markit report on services was something of a reality check to the generally positive economic news of recent weeks. Alongside last week’s disappointing manufacturing survey, it suggests that the economy is continuing to splutter. The MPC’s …
Last week brought some tentative signs that the Funding for Lending Scheme (FLS) is beginning to work. New mortgage rates have been falling and last week’s lending figures were pretty encouraging. However, the improvement remains restricted to the …
The last month has seen some tentatively encouraging news about the economy. But the good news might not last for long; the economy could contract in the last quarter of the year. … Green shoots tentatively …
1st November 2012
The deterioration in October’s CIPS/Markit report on manufacturing provided more evidence that the industrial sector is struggling and suggested that the rebound in the official measure of manufacturing output in the third quarter was only temporary. … …
Against the run of positive economic data in recent weeks, October’s decline in consumer confidence was particularly disappointing. Although GfK’s survey was undertaken before the news that the economy had emerged from recession, the likelihood of a rapid …
31st October 2012
September’s relatively positive borrowing numbers provided tentative evidence that the Bank of England’s Funding for Lending Scheme (FLS) is reducing the cost and increasing the availability of credit. But the impact of the FLS on savings rates may be …
30th October 2012
September’s CBI Distributive Trades Survey continued the run of favourable economic data seen in recent weeks. But given that real incomes will soon start to be squeezed by rising utility prices, this may only represent a temporary hiatus. … CBI …
The latest household borrowing indicators seemed to reinforce the positive news from last week’s GDP data. But in the face of continued declines in real pay, a pick-up in borrowing may be a symptom of economic weakness rather than strength. … Household …
29th October 2012
The acceleration in the MPC’s preferred measure of broad money growth supports the picture from the recent GDP figures that there has been an underlying improvement in the economy. This could help to tip the balance towards the Committee leaving policy …
In his speech last week, Bank of England Governor Mervyn King left the door open to more quantitative easing, but appeared to rule out any steps towards more unconventional policy measures, including a so-called helicopter drop of money. … King rules …
Not only did the UK pull out of its double-dip in Q3, but the 1% quarterly rise in GDP was a fair bit better than expected. However, it is hard to tell how much of this was due to temporary factors. And it certainly won’t be plain sailing from here on. …
25th October 2012
A so-called “helicopter drop” of money is generally seen as the nuclear option which will boost the economy if all else fails. However, it is not necessarily the radical step that it might seem. … Is a helicopter drop the …
24th October 2012
Today’s CBI Industrial Trends Survey for October and Q4 brought more gloomy news on the state of demand for manufactured goods. Meanwhile, Mervyn King left the door open to more quantitative easing in his speech last night. … CBI Ind. Survey (Oct./Q4) & …
There is a significant chance that the Office for Budget Responsibility judges in the Autumn Statement that the Chancellor is likely to miss his secondary target for debt as a share of GDP to be falling in 2015/16. A look back to when the last Government …
22nd October 2012
