Filtered by Subscriptions: UK Economics Use setting UK Economics
For all the hopes of a rebalancing towards exports, the UK’s trade deficit with the rest of the world has barely narrowed since the financial crisis. Our analysis suggests that a chronic lack of demand in the euro-zone is primarily to blame for Britain’s …
10th March 2016
News that a number of retailers are seeking to shrink their workforce this year suggests that the jobs recovery that only really got underway in late-2013 may be over already. What’s more, the BRC has issued a dire warning, predicting that there could …
With the Chancellor constrained by both the public finances and a desire not to rock the boat ahead of the EU referendum, this Budget is unlikely to be a radical affair. Any changes to the borrowing forecasts certainly won’t be as favourable as in …
9th March 2016
After experiencing the largest monthly fall in three years in December, UK industrial production started 2016 on a somewhat more positive note. However, external factors suggest there won’t be much further improvement in the near term. … Industrial …
After a surprisingly-strong start to the year, February’s BRC sales figures showed retail sales growth moderating. With temporary supports set to fade, 2016 looks likely to be a solid, rather than spectacular, year for consumers. … BRC Retail Sales …
8th March 2016
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. … Investment would bear the immediate …
7th March 2016
Capital Economics does not have a strong axe to grind either way on the EU question. But we do feel that many of the arguments put forward on both sides are exaggerated – including those from the Government last week. We may soon get a brief respite …
4th March 2016
Global growth worries and uncertainty surrounding the upcoming Brexit referendum seems to have finally dented UK activity. Indeed, all three Markit/CIPS surveys fell in January. The composite PMI now points to quarterly GDP growth of only around 0.3% …
3rd March 2016
This report is only available as a PDF. Click to download. … Markit/CIPS Report on Services (Feb.) …
Although we think that the UK will do well in the long run whether inside or outside of the EU, there is clearly potential for a disruptive short-term impact from the uncertainty that would be seen immediately after a “leave” vote. But we doubt that …
2nd March 2016
One of the advantages of a vote to leave the EU would be the savings the UK could potentially make on its EU contributions. This money could in theory be used to give a boost to the economy, but there are reasons why this might not happen in practice. … …
1st March 2016
The February UK Markit/CIPS manufacturing survey showed that the sector doesn’t appear to be doing any better so far in 2016 than it did in 2015. But the manufacturing sector’s prospects should improve slightly as the year progresses. … Markit/CIPS …
January’s household borrowing figures will only have added to mounting concerns regarding rapid unsecured credit growth and the sustainability of the consumer recovery. However, at this stage we do not consider the current expansion of consumer credit a …
29th February 2016
Brexit unsurprisingly dominated the news again last week, especially its continued downward impact on sterling. As the referendum nears, we expect to see further falls in the pound. However, this should not be viewed as an entirely negative development, …
26th February 2016
February’s consumer confidence figures show that consumers are becoming increasingly concerned about general economic uncertainty. However, they remain upbeat by past standards, and this should help household spending to keep growing at a solid rate in …
The labour market has been rapidly tightening, but there are reasons to think that this won’t feed into a surge in wage growth soon. Indeed, we think there is at least some slack left in the labour market. Even if we are wrong, we are optimistic that …
25th February 2016
With GDP still estimated to have risen by a quarterly 0.5% in Q4 of last year, the UK recovery is still looking solid, but unspectacular. A number of clouds loom on the horizon, but we don’t think that a sharp slowdown is in store. … GDP: Second …
Following the strong official retail sales figures in January, February’s CBI Distributive Trades Survey proved very disappointing reading. But we remain upbeat about the near-term prospects for high-street spending. … CBI Distributive Trades Survey …
24th February 2016
2015 was a good year for the consumer recovery and 2016 looks like it started off on a good footing, with strong retail spending and car registrations in January. The picture for spending in the near term looks positive, with the direct impact of energy …
23rd February 2016
Sterling remains the main casualty of Brexit uncertainty and we expect the pound to fall further as the referendum nears. However, this should not be viewed as an entirely negative development, as the much longed-for rebalancing of the economy probably …
The deal which looks likely to be sewn up at this week’s EU Council meeting should pave the way for David Cameron to announce a date for the EU referendum soon and officially launch his campaign to remain in a “reformed EU”. However, we doubt the deal …
19th February 2016
One of the main areas of concern in markets in recent weeks has been the banking sector, both in the UK and overseas. However, we do not think that this pessimism about the UK’s banking sector is justified. For a start, we have pointed out before that UK …
The Chancellor will welcome today’s better news on the public finances, ahead of the Budget next month, while January’s retail sales figures suggest that the consumer recovery remains in full swing. … Public Finances & Retail Sales …
While most developments since November’s Autumn Statement bode poorly for the public finances, lower interest rates should provide an offset. However, the Chancellor would be unwise to spend this windfall as this impact could easily be reversed in …
18th February 2016
Talk of a UK interest rate cut has resurfaced in recent weeks, following the deterioration in global market sentiment and the moves by other central banks to cut rates. There is certainly scope for the Bank of England to cut rates further, but we think …
17th February 2016
The soft UK pay growth shown in today’s labour market figures – which is still at odds with the tightening labour market – highlights why the MPC won’t be raising rates anytime soon … Labour Market Data …
January’s consumer prices release showed the UK moved further away from deflation – due to easing fuel price deflation rather than a core-price inflation rise. … Consumer Prices & Producer Prices …
16th February 2016
The boost to consumers’ spending power from low energy prices is set to fade this year. What’s more, households face a big fiscal squeeze. And with unemployment nearing its natural rate, there is less scope for strong growth in employment to drive …
12th February 2016
The further bout of financial market turmoil last week has raised fears that a sharp slowdown in the UK economy may be on the horizon. But the strength of the labour market, loose monetary policy and the prolonged boost to households’ spending power from …
January’s consumer prices figures should show a continuing movement away from deflation. While falling oil prices are being passed through to lower fuel prices at the pump, fuel price deflation will continue to ease due to larger falls a year ago. … …
After contracting in the first three quarters of 2015, the UK manufacturing sector just managed to pull out of recession in the fourth quarter. But overall production experienced its worst quarter for three years. … Industrial Production …
10th February 2016
Over the past few weeks, markets appear to have pushed back their expectation for the timing of the first hike in UK interest rates all the way to Q3 2019, and there has been some speculation of a rate cut in the near term. This stands in contrast with …
9th February 2016
December’s trade figures provide further evidence that the UK’s economic recovery remained reliant on the domestic services sector in Q4 2015. While we think fears of a sharp global slowdown are overdone, progress in reducing the trade deficit is likely …
Following a fairly disappointing Christmas period, January’s BRC sales figures suggested that consumers started the year on a strong footing. But with temporary props set to fade, spending growth in 2016 is unlikely to be spectacular. … BRC Retail Sales …
Contrary to what many newspaper headlines claimed after the Autumn Statement towards the end of last year, we have not reached the end of austerity. Not in the slightest. However, we think that the economy should weather the second stage of fiscal …
8th February 2016
The draft EU deal published last week has left the “Brexit” referendum looking likely to occur in June this year. What’s more, on the basis of the latest polls, it looks set to be a close vote. That said, we doubt that Mr Cameron’s deal changes either the …
5th February 2016
Today’s “Super Thursday” announcements were generally dovish but, true to form, Governor Carney gave mixed messages, striking a more hawkish tone at the press conference. While market expectations have changed very little, our view is that a hike in Bank …
4th February 2016
While we are positive about the prospects for productivity growth, we don’t think workers will fully benefit from this and the gains will only partially feed through to higher wage growth. This means that growth in unit labour costs should stay muted and …
3rd February 2016
Financial markets got off to a tumultuous start to the year, but the economy has begun 2016 on a slightly stronger footing. The Markit/CIPS surveys point to quarterly GDP growth of around 0.6%, a slight pick-up on recent rates. And consumer confidence …
January’s Markit/CIPS report on services provided further evidence that the economic recovery has started 2016 on a slightly stronger note. But firms have become a bit more wary about the near-term outlook, which could in turn reinforce the MPC’s caution …
Today’s publication of a draft deal on the UK’s EU negotiations is another step towards a referendum as soon as June. The modest proposed reforms will probably leave the vote very close. If the UK did vote to leave, we would see some big negative effects …
2nd February 2016
The tumble in inflation from the most recent peak of just over 5% in late-2011 to an average of 0% in 2015 has provided a welcome boost to the economy. But with near-zero rates of inflation now in the rear-view mirror, this favourable tailwind will not …
On the face of it, December’s household borrowing figures will not have eased mounting concerns regarding rapid unsecured credit growth and the sustainability of the consumer recovery. However, we do not yet consider the current expansion of consumer …
1st February 2016
The January Markit/CIPS manufacturing survey showed that the sector started 2016 on a slightly better footing. But with headwinds to the sector remaining, any near-term improvement is likely to be moderate. … Markit/CIPS Report on Manuf. (Jan.) & Money …
The composition of GDP growth in the fourth quarter of 2015 highlighted the lack of progress in rebalancing the economy. And we think the near-term prospects aren’t much better. But we do believe the potential for more balanced growth further out is …
29th January 2016
Yesterday’s GDP figures showed that growth in Q4 was entirely driven by the services sector, suggesting that consumer spending continued to shoulder the economic recovery at the end of last year. And today’s GfK Consumer Confidence Survey provided some …
January’s consumer confidence figures support our expectation that household spending will continue to grow at a solid rate in 2016. But consumption growth will probably be a bit slower than in 2015 as austerity ramps up and the stimulus from earlier …
The messages from this month’s Inflation Report will probably be pretty mixed. A lower profile for growth and inflation over the next few quarters should cement expectations that an interest rate rise soon is off the agenda. In contrast, a stronger …
28th January 2016
Following December’s disappointing official retail sales figures, January’s CBI Distributive Trades Survey does not signal much of a pick-up in sales during the post-Christmas clearance period. But we still expect the consumer recovery to get back in …
The preliminary estimate of UK GDP in Q4 confirmed that the recovery ended last year on a slightly lacklustre note, with growth a bit below its trend rate and still driven entirely by the services sector. … Preliminary estimate of GDP …
