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The CBI Industrial Trends Survey for April & Q2 showed a slight improvement in manufacturing activity over the past month and firms are still optimistic about the future, despite the risks surrounding the impending EU referendum. … CBI Industrial Trends …
25th April 2016
With only two months left until the referendum, we will be publishing a weekly Brexit Watch to help clients keep track of all the latest developments. Evidence that the economy is beginning to suffer has grown over the past week, although it is hard to …
22nd April 2016
The fall in the household saving ratio to a record low in 2015 might suggest that recent robust consumer spending growth is unsustainable and that the saving ratio will need to rise again. But the fall in household saving has been overstated by …
It is possible that an out vote in the EU referendum could push up mortgage interest rates. But if it did, we suspect any rise would be modest and that the drivers of that rise would not be those outlined by the Chancellor. … Gilt yields to rise …
At the heart of most of last week’s wealth of Brexit -related publications and comments was the issue of what will happen to trade if the UK votes to leave. As with pretty much all aspects of the Brexit debate, it is wise to take both sides’ claims …
Although retail spending has come off the boil in the past couple of months, the consumer recovery is on the whole holding up reasonably well. Indeed, there are few signs that Brexit uncertainty is having much of an effect, with consumer confidence still …
21st April 2016
March’s fall in retail sales added to other evidence indicating that the economic recovery has slowed since the start of the year. While there was better news on public borrowing, the OBR’s full-year forecast has been missed. … Public Finances & Retail …
Today’s UK labour market data added to recent signs that the economy slowed at the start of 2016. Accordingly, interest rates look set to be on hold for a while yet. … Labour Market Data …
20th April 2016
The report by HM Treasury, published today, on the long-run economic impact of a Brexit, paints a fairly gloomy picture. However, this is just another in what is an extensive and wide-ranging set of estimates, and rests on some pretty pessimistic …
18th April 2016
It is generally accepted that the main channel through which uncertainty ahead of the EU referendum will hit the economy is the negative impact on business investment. But on the whole, last week’s Bank of England Credit Conditions Survey gave some …
15th April 2016
The MPC’s unanimous decision to leave Bank Rate on hold at 0.5% today was unsurprising given recent signs of a slowdown in economic activity and heightened uncertainty surrounding the EU referendum. These factors will contribute to the MPC leaving rates …
14th April 2016
March’s consumer prices release showed the economy’s movement away from deflation resumed after stalling in February. … Consumer Prices & Producer Prices …
12th April 2016
March’s BRC sales figures showed surprisingly weak retail sales growth. While we don’t think this points to a sharp slowdown in consumer spending, it does support the view that this year may not be quite as strong as the last for consumers. … BRC Retail …
Although the EU referendum is less than three months away, its impact on the economy has so far been relatively modest. And if the UK votes to stay, activity could subsequently rebound. Admittedly, GDP growth is still unlikely to better last year’s 2.3% …
11th April 2016
Last week’s Markit/CIPS surveys pointed to a slowdown in GDP growth in the first quarter, a picture supported by other activity surveys. But while the economy seems to be going through a slightly sluggish patch, let’s not get too worried just yet. After …
8th April 2016
February’s trade and industrial production figures add to the evidence that the economy has made an uninspiring start to the year and suggest that growth remains heavily unbalanced. … Industrial Production & Trade …
Weaker-than-anticipated inflation, lingering uncertainty in global financial markets and concerns about the impact that the EU referendum is having on the real economy means that this month’s interest decision is likely to be another unanimous one to keep …
7th April 2016
We have already written about how Brexit uncertainty is affecting financial markets, with the pound in particular coming under pressure. But it is harder to find concrete evidence that the looming EU referendum is having a big adverse impact on the …
6th April 2016
While the latest National Accounts showed that the pace of the economic recovery was stronger in Q4 than previously estimated, it highlighted that the economy’s imbalances remain large and have grown worse. Admittedly, the drag on GDP from net trade …
5th April 2016
A rebound in the Markit/CIPS services survey in March suggests that the sector’s recovery is getting back on track, following a poor February. However, the survey is still consistent with a slowdown in GDP growth in Q1. … Markit/CIPS Report on Services …
The increase in quarterly GDP growth from 0.4% in Q3 to an around-trend rate of 0.6% in Q4 suggests that the recovery has regained some momentum. There are factors that should stop growth from accelerating further in the near term, but none of these …
1st April 2016
Another dismal UK Markit/CIPS manufacturing survey suggests that the sector is still struggling to put its troubles last year behind it. But the manufacturing sector’s prospects should begin to look up as the year progresses. … Markit/CIPS Report on …
Today’s data showing that the UK’s current account deficit hit a record high will reinforce fears that the EU referendum could trigger a balance of payments crisis. If funding inflows dried up, the pound would drop sharply – but this could aid the long …
31st March 2016
February’s household borrowing figures will have done nothing to ease concerns regarding rapid unsecured credit growth and the sustainability of the consumer recovery. But we do not yet consider the current expansion of consumer credit a major threat to …
The Quarterly National Accounts showed the recovery regained a little pace at the end of 2015 but this partly contributed to growing imbalances in the economy. … National Accounts & Balance of Payments …
Consumer confidence held steady in March at a level a little below last year’s average. But with confidence still high by past standards, a sharp slowdown in household spending growth is not likely to be in store. … GfK/NOP Consumer Confidence …
Despite the recent recovery in most UK markets, there is still evidence that they are bracing themselves for a possible Brexit. Accordingly, we think there is scope for markets to move significantly further when the result of the vote becomes known on …
30th March 2016
The relatively timid measures announced by the Bank of England’s Financial Policy Committee (FPC) today underlined that it is set to tread cautiously when implementing macroprudential policy. Accordingly, we doubt that the FPC’s actions will knock the …
29th March 2016
The Financial Policy Committee (FPC) had a lot on its plate at last week’s meeting, with concerns about the impact of a Brexit only adding to the long list of existing risks to financial stability. Even if the FPC chooses to stand pat again at this …
24th March 2016
The consumer recovery is still going strong, with household spending the driving force of the overall economic recovery. Although the retail sales figures have been a bit volatile recently, the underlying trend still looks robust. That said, price …
We doubt that February’s dip in retail sales is the beginning of a more pronounced slowdown in the pace of the consumer recovery. What’s more, while there are some headwinds to spending growth, the outlook remains fairly bright . … Retail Sales …
By promising no further welfare cuts, the Government has ruled out yet another way of raising some money should it need to. This suggests that the Conservatives will struggle to meet their strict fiscal rules if the OBR’s forecasts deteriorate further or …
23rd March 2016
Online sales growth – while still very strong – has been slowing over recent years. However, we think the big slowdown in growth should be behind us, with innovations in mobile technology and internet shopping providing plenty of scope for further growth. …
This Thursday marks the date that the Scottish government had pencilled in for “independence day” if Scotland had voted to leave the UK in 2014’s independence referendum. So it seems a particularly apt time to revisit the Scottish question, which is …
22nd March 2016
February’s disappointing public finances figures were yet another blow for the Chancellor by suggesting the OBR’s new forecasts published in last week’s Budget already look too optimstic . Meanwhile, the unchanged inflation rate of 0.3% in February …
Despite some improvement, March’s CBI Industrial Trends Survey indicates that the manufacturing sector recovery remains sluggish, although there are some reasons for optimism further ahead. … CBI Industrial Trends Survey …
21st March 2016
Large parts of the Budget were clearly aimed solely at repairing the damage that the OBR’s new economic forecasts did to the Chancellor’s chances of meeting his fiscal target. That said, there is clearly a big question mark over whether Mr Osborne really …
18th March 2016
February’s consumer prices figures should show inflation creeping further above the zero rates seen for most of last year. Although the risk of a relapse cannot be entirely ruled out – if, for example, the economy deteriorates a lot further – it now …
The OBR’s decision to cut its productivity growth forecasts left the Chancellor scrambling to find some money to achieve his 2019/20 surplus goal. But we think that productivity growth will be much stronger than the OBR expects, giving the Chancellor an …
While the measures announced at yesterday’s Budget amounted to a small net giveaway to consumers, the bigger picture is that a significant fiscal squeeze still lies ahead. And although retailers did not come away empty handed, the measures will have …
17th March 2016
The MPC’s decision to leave interest rates on hold at 0.5% today – marking the 7th anniversary of rates being at this record low – was unsurprising given the softness of recent activity indicators and heightened uncertainty about the economic outlook. The …
Whether the chancellor meets his objective of eliminating the budget deficit by the end of this parliament depends upon how well the economy performs. Because we are more optimistic than the OBR about growth, we think his chances are reasonable. …
16th March 2016
With the Chancellor setting the backdrop to this afternoon’s Budget as one where the global “storm clouds” are gathering, today’s labour market figures offer a ray of sunshine. However, wage growth is still fairly subdued by past standards, which will …
While we think the UK will do well either inside or outside the EU in the long run, there is potential for a short-term hit to investment in particular. But we don’t think that this would derail the recovery. … UK Budget 2016 …
15th March 2016
Concerns about the strength of the global economy have eased over the past month, boosting market sentiment. This comes despite ongoing worries about the upcoming EU referendum and domestic activity indicators, such as February’s Markit/CIPS PMI, …
The possibility of a Brexit has raised a number of worries for British retailers, including the prospect of falling consumer demand and rising imported goods costs. But while the short-term impact of a decision to leave the EU might be negative for …
14th March 2016
The two main events this week – the Budget and MPC decision – will highlight the divergence between monetary and fiscal policy stances. With Bank Rate likely to be held at 0.5%, marking seven full years at a record low, monetary policy is doing a great …
11th March 2016
With recent survey evidence suggesting the economic recovery has lost some pace at the start of the year, today’s trade figures suggest that growth was worryingly unbalanced too. … Trade …
Recent developments are unlikely to have caused Monetary Policy Committee (MPC) members to fundamentally change their view since they voted unanimously to leave rates on hold in February. Indeed, there is nothing in the data that should push the more …
10th March 2016
