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May’s BRC retail sales data were fairly encouraging , following two months of disappointing readings. Overall, there’s relatively little sign that consumer spending is suffering much from uncertainty ahead of the EU referendum. … BRC Retail Sales …
7th June 2016
Recent data have confirmed that the recovery slowed at the start of 2016 and that growth remained precariously unbalanced. Meanwhile, the Markit/CIPS surveys have brought further evidence that intensifying referendum uncertainty has been weighing on …
3rd June 2016
Data released this week confirmed that Brexit uncertainty is negatively affecting businesses – but consumers continue to look considerably less concerned. Although markets have responded to the recent shift in polls towards “leave”, they don’t look as …
While concerns about the overvaluation of UK housing are nothing new, recent signs that the market is cooling has led some to proclaim that we are on the cusp of a house price crash. Although we don’t share this level of pessimism, we do think that …
The improvement in the UK Markit/CIPS services survey in May provides reassurance that the economic recovery has not ground to a halt in Q2. But this is still consistent with an easing in GDP growth to about 0.2% in Q2, down from Q1’s 0.4% rate. … …
With the EU referendum now just three weeks away, we have highlighted below some of the key events which could potentially sway voters and move markets in the build-up to the vote. … Key events to watch in the run-up to the EU …
2nd June 2016
As expected, April’s household borrowing figures provided further evidence that the mortgage market is cooling. By contrast, unsecured lending growth remains high and could prompt additional action from policymakers if it accelerates much further. … …
1st June 2016
The small improvement in the Markit/CIPS manufacturing survey in May did little to change the fundamental picture of a struggling industrial sector. But we remain optimistic that the sector’s prospects will start to look up again later this year. … …
This week the Treasury warned that a vote to leave the EU would result in a recession, while GDPdata added to the evidence that Brexit uncertainty contributed to Q1’s slowdown. But there weremore signs that investors’ Brexit fears are easing, as the …
27th May 2016
Relatively small overshoots in public sector borrowing, like that shown in last week’s figures, could soon pale into insignificance if the UK were to vote to leave the EU next month. Indeed, the Institute for Fiscal Studies (IFS) last week warned that to …
Consumer sentiment seems to be holding up pretty well despite the looming EU referendum. Nonetheless, consumer spending growth in 2016 will probably still be a bit slower than in 2015 as austerity ramps up and the stimulus from earlier falls in energy …
Today’s release confirmed that the recovery slowed at the start of 2016 and that growth remains very unbalanced. However, there appears to be more at play than just Brexit uncertainties. … GDP: Second Estimate & Expenditure Breakdown …
26th May 2016
We don’t think that a vote to leave the EU would have a very significant negative impact on the FTSE 100, although the effect on UK indices of smaller firms might be more pronounced. Further ahead, a weaker pound and rising commodity prices should …
25th May 2016
If the UK votes to stay in the EU, we expect a kneejerk strengthening in financial markets, although any rise in the pound might be short-lived. The economic recovery would quickly get back on track, although any rebound would be limited by the fact …
May’s CBI Distributive Trades Survey indicates that Brexit concerns are still weighing on the retail sector. But the survey has been more pessimistic than the official data recently, so the latest reading may be overstating the extent of any slowdown. …
24th May 2016
The disappointing tone of the latest public borrowing figures ended the recent short run of more upbeat economic data and indicated that the Chancellor has started the fiscal year on the back foot. … Public Finances …
We think the Treasury (HMT) report, published today, suggesting that the UK will go into recession if it leaves the EU goes a bit far. Existing trading relationships will remain in place over the two year negotiating period and a fall in sterling, as …
23rd May 2016
This week saw the campaign to remain in the EU surge ahead in opinion polls, helping to ease investors’ Brexit worries. Meanwhile, strong retail sales data suggest that consumers haven’t been as badly affected by referendum uncertainty as previously …
20th May 2016
Last week broke the recent run of disappointing news and went some way to calming fears that the economy is slowing abruptly. Perhaps most reassuring was the pick-up in retail sales growth, given that the economy has recently been reliant on consumer …
The CBI Industrial Trends Survey for May showed an improvement in manufacturing activity over the past month despite a tough external environment and EU referendum uncertainty. … CBI Industrial Trends Survey …
The consumer recovery appears to have got back on track, at least as far as the official retail sales figures indicate. Indeed, consumer confidence still seems to be holding up well despite the looming EU referendum. And even though nominal earnings …
19th May 2016
April’s official UK retail sales figures painted a more upbeat picture than the recent survey and anecdotal evidence and suggested that high street spending has now come through its recent soft patch. Indeed, consumers appear to be shrugging off any …
Although there were some bright spots in today’s labour market figures , on the whole they offered a further indication that the economic slowdown has sapped the jobs recovery of its recent vigour. … Labour Market Data …
18th May 2016
April’s fall in CPI inflation merely reflects erratic Easter effects unwinding and is unlikely to be the start of a renewed downward trend. But the big picture is that price pressures in the economy are still weak. … Consumer Prices & Producer Prices …
17th May 2016
The MPC’s attempt to base its forecasts on the UK remaining in the EU suggests that it believes trade-weighted sterling will rise by around 5% on a vote to stay. But it also implies that it doesn’t think that interest rate expectations will be affected. …
13th May 2016
This week’s dismal trade, industrial production and construction data has further intensified concerns that Brexit uncertainty is having an effect on activity. Nonetheless, they also highlight that not all of the recent slowdown can be blamed on …
March’s construction figures confirmed the sector’s recovery has gone into reverse, leaving GDP growth precariously unbalanced. What’s more, recent evidence points to continuing weakness in the near term. … Construction Output …
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. …
12th May 2016
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 …
Brexit concerns have not been the only driver of the recent slowdown, suggesting that we should not expect a particularly big rebound in activity if the UK votes to stay in the EU in June. At the same time, though, we doubt that a serious reduction in …
11th May 2016
Disappointing official industrial figures in March confirmed that the sector has slipped back into recession, leaving GDP growth precariously unbalanced. … Industrial Production …
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 …
Consumers face a tougher year than last, with Brexit uncertainty mounting, austerity increasing and inflation rising. Nonetheless, strong levels of confidence and a resilient labour market should prevent consumer spending growth from slowing too …
4th May 2016
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 …
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 …
