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With the Monetary Policy Committee (MPC) still waiting to see how the effects of its past asset purchases pan out, no change in policy is likely this month. The MPC’s fears of a rise in inflation expectations are also likely to linger a bit longer. But it …
1st April 2010
The economy has bounced back somewhat since the weakness at the start of the year, suggesting that much of it was just a temporary response to the snow and VAT rise. But the housing and consumer sectors, in particular, have failed fully to recover their …
31st March 2010
The Conservatives’ pledge to use efficiency savings to avoid the Government’s planned increases in national insurance in 2011 leaves both parties’ fiscal plans highly dependent on uncertain reductions in “waste” in the public sector. Much more concrete …
30th March 2010
Q4’s national accounts and balance of payments releases left the UK economy looking both a bit stronger and a bit better balanced than before. But they do not alter the big picture of a sluggish and fragile recovery. … National Accounts & Balance of …
February’s surprise drop in the Nationwide house price index was not repeated, suggesting that the recovery in house prices still has some life. However, with mortgage lending remaining subdued in February, the labour market still weakening and …
Mr Darling’s Budget may have provided £100m to repair potholes in the roads, but it left plenty of gaping holes in the fiscal arithmetic. Most obviously, the projected fall in the budget deficit continues to rely on what look like very optimistic economic …
29th March 2010
More than a year after the Bank of England began its quantitative easing programme, broad money and bank lending are still struggling to rise. The latest worrying development is a renewed drop in net lending to businesses. … Monetary Indicators Monitor …
Although, perhaps, still artificially weak following the poor weather and the end of the previous stamp duty holiday, today’s mortgage lending data do not inspire confidence that last year’s housing market recovery will be extended this year. … Mortgage …
Surveys of house price expectations, although weakening, are yet to signal the renewed falls that we are forecasting for the second half of this year. However, their record in anticipating price movements is mixed, with consumers’ expectations in …
It is clearly reassuring that consumer spending has recovered somewhat after the snow and VAT rise pulled down spending at the start of the year. And in the near-term, spending should receive some small additional support from the Budget giveaway for this …
25th March 2010
February’s official measure of retail sales confirmed that high street spending bounced back after the snow and VAT rise hit spending at the start of the year. But the underlying trend appears to have softened, suggesting that consumers may be struggling …
This was a clever budget which made the most of very difficult circumstances. The Chancellor largely avoided the temptation to bribe the voters with their own money. There was a package of tax cuts and spending increases amounting to about 2.8bn in …
24th March 2010
While there can be little doubt that they will be popular among aspiring first-time buyers, it is fairly clear that the Chancellor’s stamp duty measures do nothing to resolve the real problems facing the housing market – overvaluation, a lack of mortgage …
This checklist is intended to help clients keep track of the important measures and numbers announced during the Chancellor’s Budget speech at 12.30pm and to provide some instant context. … UK Budget …
The recent surge in industrial action in the UK has lead to concerns that a ‘Spring of Discontent’ – echoing the highly-disruptive period of strikes in 1978/9 known as the ‘Winter of Discontent’ – is underway. However, while the current strikes will do …
23rd March 2010
The Chancellor appears set to announce new lending targets for the partly-nationalised banks RBS and Lloyds Group in his Budget tomorrow. However, the chances of the new targets significantly increasing the amount of bank lending are pretty slim. … New …
February’s consumer prices figures should provide some reassurance that, beneath the various special factors that have affected inflation in recent months, underlying price pressures in the UK economy remain encouragingly subdued. … UK Consumer Prices …
It has become almost a cliché to talk of the need for a “credible” medium-term plan for the public finances. But what should such a plan look like, when might it appear and what impact might it have? … Just what is a “credible plan” for the public …
22nd March 2010
February’s better-than-expected public finances figures suggest that Alistair Darling could have between £5bn and £10bn at his disposal in Wednesday’s Budget. But will he spend it on preelection tax and spending sweeteners or use it to reduce public …
It has been suggested that the recent falls in unemployment provide further evidence that the economy is recovering more strongly than the official data show. However, the broader news on the labour market appears consistent with the sluggish recovery …
19th March 2010
February’s fortuitously timed improvement in the public finances has given Mr Darling scope for some pre-election sweeteners in next week’s Budget. But make no mistake – a long and painful fiscal squeeze still lies ahead. … Public Finances …
18th March 2010
The Monetary Policy Committee seems increasingly concerned about the risk of a rise in inflation expectations. But we think that those concerns are misguided and could lead to a policy error. … MPC shouldn’t fret about inflation …
17th March 2010
The minutes of March’s Monetary Policy Committee (MPC) meeting confirmed that the Committee is content to sit back for now and see how the effects of its past asset purchases pan out. But while it may have been encouraged by the drop in claimant count …
Alistair Darling’s third Budget will be hardly recognisable as the last before a general election. With the UK’s budget deficit baring comparison with that of Greece, the markets and credit rating agencies would severely punish any sort of pre-election …
15th March 2010
Last week’s trade figures probably won the prize for most disappointing economic data so far this year. Although the snow may have been partly to blame, there has been a deteriorating trend in the trade balances for about six months now. … Lower pound …
The main success of the Bank of England’s policy of quantitative easing (QE) has been the recent rise in asset prices. However, QE appears to have played only an indirect role in the housing market rebound, suggesting that an extension of the policy won’t …
11th March 2010
Concerns that the Monetary Policy Committee (MPC) is nearing the limit of how much quantitative easing (QE) it can undertake are probably overdone. Nonetheless, the potential for QE to spark an asset price bubble means that any sensible central bank is …
10th March 2010
January’s fall in UK industrial production, while possibly weather affected, has put a bit of a dent in hopes that the economic recovery might have picked up speed in the first quarter of the year. … UK Industrial Production …
February’s UK trade figures suggested that the much needed pick-up in the external sector is still not in evidence. While other data also underlining the vulnerability of the housing and consumer sectors, the outlook for the overall economy remains pretty …
9th March 2010
We think that cutting Bank Rate all the way to zero remains a potential tool in the Monetary Policy Committee’s arsenal. None of the obstacles to lower rates put forward by the MPC seem insurmountable - after all, they have not stopped rates falling to …
8th March 2010
Last week brought further tentative indications that the recovery in the housing market might be losing a little steam. Both the Halifax and Nationwide recorded falls in house prices in February while recent indicators of demand and activity have also …
February’s UK producer prices figures have brought the first hints that cost pressures in the production sector may be starting to ease a bit. … Producer Prices …
5th March 2010
The MPC remains in wait and see mode while it assesses the economic outlook and the impact of its previous policy measures. But with the recovery sluggish, inflation worries set to ease and a major fiscal squeeze still approaching, further support from …
4th March 2010
Without the Bank of Englands programme of quantitative easing (QE) launched a year ago, the economy would probably still be in recession. However, the policy has clearly not worked well enough to kick-start a strong economic recovery. … QE a year …
The decline in the Halifax house price index is further evidence that the housing market recovery took a backward step at the turn of the year. It is possible that temporary factors mean that recent data overstate the true extent of the weakness. Even so, …
This report is only available as a PDF. Click to download. … Halifax House Prices (Feb.) …
Fears that the general election will result in a hung parliament may continue to weigh on the pound in the coming weeks. But the prospect of a major fiscal squeeze under any form of government should eventually prove positive for the exchange rate. … …
3rd March 2010
February’s CIPS/Markit report on services suggested that, after the weather and VAT-related setback seen at the start of the year, the recovery in the biggest part of the economy is back on track. … UK CIPS/Markit Report on Services …
The Monetary Policy Committee voted to pause its programme of quantitative easing (QE) at its latest meeting. But both the Inflation Report - showing inflation undershooting its target further ahead - and various comments by MPC members have left the door …
2nd March 2010
This week marks the one year anniversary of the launch of the Bank of England’s quantitative easing (QE) programme of asset purchases. As Mervyn King has pointed out, without QE, the UK would probably have experienced a sharp monetary contraction. But …
1st March 2010
February’s CIPS/Markit report on manufacturing brought evidence that the industrial side of the economy is continuing to recover. But there are still major uncertainties over the outlook for the overall economy. … CIPS/Markit Report on Manufacturing …
Comments from the Monetary Policy Committee (MPC) dominated events last week, with the key message being that a further extension of quantitative easing (QE) could soon be on the cards. Of course, we already knew as much from the recent Inflation Report …
Today’s Nationwide house price index suggests that the New Year slump in buyer enquiries and mortgage lending may have reflected, not only the snow and the end of the stamp duty holiday, but also growing concerns about the durability of the economic …
26th February 2010
The second estimate of Q4 GDP did little to alter the picture of a very fragile recovery in the UK economy. We still expect GDP growth of only about 1% in 2010. … GDP: Output, Income and Expenditure …
It is still early days, but our prediction last month that April would be the high water mark for house price inflation appears to have been borne out. For now, house prices continue to rise, but easing supply shortages, overvaluation and, of course, the …
