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This week brought the Office for Budget Responsibility’s (OBR) first assessment of the effect of the Brexit vote on the economy and the public finances. This was more upbeat than had been anticipated prior to the referendum but, even so, drew criticism …
25th November 2016
The net giveaway to consumers in the Autumn Statement was small compared to previouslyannounced takeaways. Accordingly, fiscal policy should still weigh on households’ spending power over the next few years. … Chancellor “just about manages” to help …
The Office for Budget Responsibility’s economic forecasts garnered more attention than usual after last week’s Autumn Statement, and have been criticised by some for being too gloomy on Brexit. On the face of it, this criticism seems unwarranted, given …
November’s CBI Distributive Trades Survey suggests that consumer spending has held up well in Q4. However, we still expect a slowdown in the coming quarters. … CBI Distributive Trades Survey …
The second estimate of Q3 GDP left the quarterly rise unrevised at 0.5% and suggested that firms and households have been undeterred by the Brexit vote. Meanwhile, business surveys suggest that the economy has sustained this pace since. … GDP: Second …
Philip Hammond’s first (and last) Autumn Statement has been generally well received as a compromise between the conflicting needs to repair the UK public finances and provide the economy with more support after the vote for Brexit. But we think he missed …
24th November 2016
The recent robustness of the economy prompted the Chancellor to make only a modest adjustment to the stance of fiscal policy in his first Autumn Statement. But his new fiscal rules provide room for manoeuvre should the economy require greater support in …
23rd November 2016
This checklist is intended to help clients keep track of the important measures and numbers announced during the Autumn Statement at 12.30pm and to provide some instant context. … UK Autumn Statement 2016 …
22nd November 2016
November’s CBI Industrial Trends Survey provided another indication that economic growth has been better-balanced in Q4. However, it highlighted the impact that the drop in the pound is beginning to have on price pressures. … CBI Industrial Trends Survey …
While Chancellor Hammond would have welcomed October’s improvement in the public finances, it is unlikely to be a sign of things to come. This will probably prevent him from being too bold in the Autumn Statement. … Public Finances …
The rumour mill has been a little quieter than usual. But the Chancellor is surely piecing together a package of giveaways for his Autumn Statement – perhaps something in the region of about £7bn in 2017/18 – which focuses on increased infrastructure …
18th November 2016
This week brought some more mixed news on the state of the economy after the referendum, but markets have revised up their expectations for interest rates, and gilt yields have risen, regardless. … Brexit Watch: Some more mixed news on the …
After narrowly avoiding EU fines for its excessive fiscal deficit, the Portuguese Government has a lot of work to do to get its finances in order. But strong political resistance to austerity and continued slow economic growth mean that the deficit is …
17th November 2016
Despite Chancellor Hammond’s rare opportunity to make a substantial changes to the stance of UK fiscal policy in the Autumn Statement on 23rd November, lingering worries about the outlook for the public finances will probably limit his boldness. As such, …
October’s retail sales figures provided further evidence that shoppers remain undeterred by the Brexit vote. Nonetheless, this rate of spending growth looks unsustainable, and there are a number of headwinds on the horizon. … Retail Sales …
Today’s figures confirmed the indications from the surveys that the leave vote is starting to sap the jobs recovery of its previous strength. … Labour Market …
16th November 2016
The fall in inflation in October was a temporary stumble along the upward path that should see inflation breach its 2% target in 2017. This will eat into real incomes, but other supportive factors should ensure consumer spending doesn’t slow too sharply. …
15th November 2016
Today’s figures confirmed the indications from the surveys that the leave vote is starting to sap the jobs recovery of its previous strength. … Brexit Watch: Trump helps sterling find …
11th November 2016
We have argued that there are good reasons to think that the economic ramifications for the UK of Donald Trump’s victory in the US election are unlikely to be very large. However, at the margin, his proposed large fiscal stimulus might help Chancellor …
The latest trade figures highlighted that a better performance from the external sector was one of the factors behind the strength of GDP growth in Q3. And the drop in the pound should have some stronger beneficial effects in time. … Trade …
9th November 2016
While Donald Trump’s victory in the US Presidential election adds another element of uncertainty to the UK’s economic outlook, there are reasons why the consequences for the UK may be smaller and less adverse than those in some other areas. … Trump …
Today’s industrial production figures confirmed that the hit to the manufacturingsector from the Brexit vote wasn’t long-lasting. … Industrial Production …
8th November 2016
October’s BRC Retail Sales Monitor suggests that the sector’s momentum continued into Q4. However, this strength is unlikely to last too much longer. … BRC Retail Sales Monitor …
Thursday’s High Court ruling on Article 50 is unlikely to prevent Brexit from happening, but it raises the chance that the start of the process gets delayed. Moreover, just as markets were looking forward to getting the US election out of the way, this …
4th November 2016
We think that the upward revision to the MPC’s inflation forecast was about the right magnitude. But for the Committee to respond to this – or a greater – overshoot of the target, domestic costs pressures would also have to rise. We think that GDP growth …
The unanimous decision by the MPC to leave interest rates and its asset purchases on hold in November did not come as a surprise given the continued run of upbeat news on the health of the economy. And while the MPC will be watching closely for any …
3rd November 2016
The latest business surveys suggest that the economy maintained its strength at the start of Q4. Gains in both the Markit/CIPS services and construction PMIs in October left the economy-wide composite PMI looking consistent with quarterly growth in GDP of …
October’s Markit/CIPS report on services suggests that the economy got off to a good start in the fourth quarter and is probably the final blow for a cut in Bank Rate at today’s Monetary Policy Committee meeting. … Markit/CIPS Report of Services …
While the fiscal cost of cutting Value Added Tax (VAT) would be quite high, it could provide theeconomy with valuable support by limiting the rise in inflation and associated real income squeeze. … What would be the impact of a cut in …
2nd November 2016
Consumer spending growth is unlikely to maintain its recent strength in the year ahead. But supportive credit conditions should prevent spending from slowing too sharply, with past monetary loosening continuing to feed through to lower borrowing costs. … …
October’s Markit/CIPS manufacturing survey suggests that the sector’s post-referendum contraction will prove short-lived. And the fall in the pound should helpthe economy to rebalance towards manufacturing in time. … Markit/CIPS Report on Manuf. …
1st November 2016
September’s household borrowing figures highlight that the housing market has started to stabilise and that consumers’ appetite for debt hasn’t taken much of a hit following the referendum. And while a deterioration in household’s perception of the …
31st October 2016
This week’s economic data brought confirmation that the immediate economic impact of the vote to leave the EU has not been nearly as severe as many had initially expected and gives us reason to be optimistic that the economy should not lose too much pace …
28th October 2016
There are some reasons why the recent fall in the pound will be less positive for the economy than that seen after 1992’s ERM exit. But there are also reasons to think that it might be more positive than that seen after the 2008 financial crisis. … 1992 …
The recent run of relatively upbeat economic data culminated last week with the preliminary estimate of Q3 GDP, which was stronger than even we had been expecting. Of course, there are some good reasons to not read too much into these figures. Growth was …
While consumer confidence fell a little in October, the headline balance is still high by past standards and points to strong retail sales growth at the start of Q4. … GfK/NOP Consumer Confidence …
The resilience of the economy in Q3, combined with a stronger inflation outlook, will probably be enough to persuade a majority of MPC members to leave rates unchanged at next week’s meeting. What’s more, while we would not rule out the possibility of …
27th October 2016
October’s CBI Distributive Trades Survey gives us another reason to be optimistic that the economy should not lose too much pace in the fourth quarter. Nonetheless, there are anumber of headwinds which could put a lid on spending growth ahead. … CBI …
Today’s GDP figures confirmed that the immediate economic impact of the vote to leave the EU has not been nearly as severe as many had initially expected. … Preliminary estimate of GDP …
As one of the most timely and frequent indicators of household spending growth, attention naturally falls on the monthly retail sales numbers to gauge the strength of activity in the consumer sector. But these figures seem to be painting a …
26th October 2016
The CBI Industrial Trends Survey for October and Q4 suggests that the uncertainty created by the Brexit vote is weighing on the manufacturing sector, but that the fall in the pound will help manufacturers deal with this uncertainty. … CBI Industrial …
24th October 2016
This week’s economic data broke from the recent upbeat trend, with inflation jumping up and the latest public finances figures highlighting the challenge that the Chancellor faces in the Autumn Statement. Indeed, it will be tricky to provide support to …
21st October 2016
It’s been a long time coming, but we will finally get the official verdict this week on how much economic growth has slowed in the third quarter following the referendum outcome. Encouragingly, the gamut of data has provided evidence that the slowdown has …
September’s public finances figures set the tone for a fairly disappointing set of fiscal forecasts likely to be revealed in the Autumn Statement next month. But this won’t prevent the Chancellor from scaling back the pace of austerity. … Public Finances …
Consumer spending growth is unlikely to maintain the strength seen since the referendum in the coming quarters. Real household incomes are likely to take a hit, with employment intention surveys consistent with a sharp slowdown in employment growth. …
20th October 2016
While retail sales remained flat in September, spending on the high street held up well over Q3 as a whole. However, it seems unlikely that this strength will last in the face of softer employment and wage growth and higher inflation. … Retail Sales …
August’s labour market data showed that the EU referendum still hasn’t provided much of a hit to the jobs recovery. But surveys suggest employment growth will slow further in the coming months which should contain wage growth. … Labour Market …
19th October 2016
Apparent concerns in the bond market that the Monetary Policy Committee (MPC) has gone soft on inflation look overdone. We expect the forthcoming rise in inflation to be transitory. But if it isn’t, the Committee will take the action needed to meet its …
18th October 2016
The rise in CPI inflation in September – to its highest level in almost two years – is likely to fuel market concerns about the upward impact of the pound’s fall on prices. However, we don’t think that it will trouble the MPC too much. … Consumer Prices & …
Another dramatic week in the Brexit saga saw the pound fall further, bond yields rise, the chance of another Scottish independence referendum before long build and Marmite almost get pulled off the shelves. That said, with the economic case for Scottish …
14th October 2016
