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The MPC’s decision to keep interest rates unchanged at 0.5% this month would have been an easy one given the recent softening in both domestic and global economic news. While financial markets have probably gone too far in pushing back expectations of the …
8th October 2015
While we think that the overall UK economy would do well either inside or outside the European Union, a Brexit could still have some significant implications for the devolved regions – most obviously if it causes Scotland to think once again about going …
7th October 2015
August’s UK industrial production figures were surprisingly good, although they are not enough to have stopped the overall economic recovery from slowing in the third quarter. … Industrial Production …
The latest business surveys made for dismal reading. Indeed, the average level of the economy-wide Markit/CIPS composite PMI over Q3 as a whole points to quarterly growth in GDP of just 0.5%, following Q2’s 0.7% expansion. However, we doubt that this is …
6th October 2015
We doubt that the UK’s outlook hinges on the Brexit question. Things have changed a lot since 1973, when joining the European Union (EU) was a big deal for the UK. We think that the UK economy will do well over the next few years whether inside or outside …
While the weak tone of the Markit/CIPS services survey in September brought more evidence of a soft end to Q3, we doubt that the economy is on the cusp of a renewed slowdown. … Markit/CIPS Report on Services …
5th October 2015
The economic picture is a little more nuanced than the seemingly relentless barrage of good news last week might have suggested. But the upshot is that we are still feeling pretty good about the outlook for the UK. The recovery has been stronger than …
2nd October 2015
The Monetary Policy Committee (MPC) does not seem too concerned by risks from China, while the recent pick-up in wage growth will worry the hawks on the Committee. Indeed, markets have probably gone too far in again pushing back expectations of a hike to …
1st October 2015
September’s Markit/CIPS report on manufacturing provided further evidence that the economic recovery is extremely dependent on the services sector at present. … Markit/CIPS Report on Manuf. …
The Quarterly National Accounts confirmed that the economic recovery maintained a strong pace in Q2. And although the latest business surveys suggest that growth may have moderated in Q3, we expect this to be only temporary. … National Accounts & Balance …
30th September 2015
The weaker-than-expected tone of September’s GfK consumer confidence survey does little to alter the view that consumer spending growth should maintain a healthy degree of momentum over the coming quarters. … GfK/NOP Consumer Confidence …
It is generally assumed that a UK exit from the EU would lead to a sharp drop in migration, reducing the pool of labour and undermining economic growth. However, a Brexit could lead to a more sensible immigration policy based on skills, rather than …
29th September 2015
Growth in household borrowing strengthened in August. Even so, there is little to suggest that brisk consumer spending has been founded on an unsustainable increase in credit. … Household Borrowing Monitor …
Last week’s public finance figures suggested that deficit reduction has hit a roadblock. But the path of reduction has hardly been a completely smooth one so far. And the strong economic recovery in recent months is yet to feed through fully to tax …
25th September 2015
A British exit from the EU would probably hurt the City in the short term, but it would not spelldisaster. The City’s competitive advantage is founded on more than just unfettered access to thesingle market. And an EU exit would enable the UK to broker …
24th September 2015
August’s public borrowing figures brought the recent run of good news on the public finances to an abrupt end. That said, hopefully this will just be a temporary blip, as tax receipts should be feeling the benefits of the recent strength of the economic …
22nd September 2015
The UK Government could save about £10bn per year on its contributions to the EU’s budget if it left the EU. But a Brexit would not need to create much economic disruption to offset these savings. What’s more, the Government might still have to make some …
21st September 2015
Although the US Fed kept interest rates on Thursday, a rate rise across the pond is not far away. And on the face of it, the pick-up in UK pay growth revealed last week suggested that the Bank of England might not actually be that far off hiking either. …
18th September 2015
Whilst a British exit from the EU may cause the UK to lose out on some foreign direct investment (FDI), access to the single market is not the only reason that firms invest in the UK. Accordingly, we still think that the UK would remain a haven for FDI …
Households are continuing to see substantial increases in their purchasing power. Annual growth in average weekly earnings (excluding bonuses) picked up from 2.8% to 3.2% in July, well above that months near zero-rate of CPI inflation. And the UK looks …
August’s retail sales figures showed that the pace of spending growth on the high street has remained fairly feeble so far this quarter. But we doubt that this signals a more widespread slowdown in the consumer recovery. … Retail Sales …
17th September 2015
Over the next few weeks, we will be publishing a series of pieces of work looking at the impact that leaving the EU would have on the UK economy, culminating in a presentation at our annual conference tour at the end of September. This Focus kicks things …
16th September 2015
The latest labour market statistics confirmed that the recent slowdown in the pace of the jobs recovery was only temporary. However, we don’t think that this will prompt the MPC to hike rates soon. … Labour market data …
Concerns have been mounting about the impact of the introduction of the National Living Wage (NLW) in April next year, with companies such as Next and Whitbread warning that they will have to put up prices to compensate for higher wage rates. We continue …
15th September 2015
UK inflation is still bouncing around zero and is likely to remain there for most of the rest of this year. This period of virtually no inflation is a good thing for the UK, as it is giving a welcome boost to households’ spending power. … Consumer Prices …
Even if the US Fed holds fire this week, US interest rates will be rising soon – and, in our view, quicker than markets expect. Turning points in UK monetary policy are often close to US ones. But there are good reasons, such as the bigger fiscal …
11th September 2015
We expect deflation to have returned in August; indeed, inflation is likely to remain below zero for most of the rest of this year. But it is not something to worry about as its main effect will be to boost households’ real incomes. … Deflation Watch: …
Although the MPC kept interest rates unchanged at 0.5% today, it left its options open – saying that recent events had not altered its central view for the UK economy, while conceding an increase in downside risks to global activity that merited …
10th September 2015
July’s industrial production and trade figures highlight that the strength of the pound and weakness in demand in key export markets held back the recovery in the manufacturing sector at the beginning of the third quarter. … Industrial Production & …
9th September 2015
On the face of it, August’s weak BRC Retail Sales Monitor may add to concerns that the economy has lost a bit of steam in the third quarter. However, the underlying picture is not as weak as it looks. … BRC Retail Sales Monitor …
8th September 2015
If the polls are anything to go by, left-leaning Jeremy Corbyn will be elected as the next leader of the Labour Party on 12 th of September. This has prompted a heated debate over his economic policies – so called “Corbynomics”. “People’s QE” in …
4th September 2015
The UK economy fired on all cylinders in Q2, with investment and net trade both providing considerable support to GDP growth. However, exports look set for a relapse soon. … Resurgence in exports unlikely to …
3rd September 2015
Last month’s MPC minutes and Inflation Report suggested that the Committee was in less of a hurry to raise rates than many had thought. And the recent market turmoil and commodity price falls are only likely to encourage the MPC to hold fire for a while …
The fall in August’s Markit/CIPS report on services will add to concerns about the sustainability of the recovery following the deterioration in the manufacturing survey already released. But we doubt the economy is on the cusp of a slowdown and the big …
July’s money and credit figures showed a further rise in lending to households and the housing market picking up pace. Even so, there is little to suggest that the strength in consumer spending has been founded on an unsustainable increase in credit. As …
1st September 2015
August’s Markit/CIPS report on manufacturing showed that the strong pound is crimping exporters and so suggests that the major support net trade provided to GDP growth in Q2 will be a blip. But there was better news on bank lending. … Markit/CIPS Report …
Turbulence in financial markets once again overshadowed some positive economic developments on the domestic front last week. Indeed, Q2’s second estimate of GDP showed that the recovery in household spending has maintained a healthy degree of momentum, …
28th August 2015
The second estimate of Q2 GDP showed that the recovery received considerable support from net trade. The pound’s recent appreciation suggests that this support is unlikely to last. But with households’ real incomes set to be boosted by another spell of …
The very strong reading of the GfK consumer confidence survey in August provides reassurance that recent softer growth in retail sales is likely to be just temporary. … GfK/NOP Consumer Confidence …
The upbeat tone of August’s CBI Distributive Trades Survey provided an encouragingsign that the consumer recovery has continued apace in Q3. And looking ahead, therecent fall in commodity prices should provide a further boost to spending. … CBI …
26th August 2015
Although the UK has clearly been caught up in the recent meltdown in global financial markets, we doubt that it will knock the economic recovery off course. That said, it provides the more cautious members of the MPC with another reason to hold fire on …
25th August 2015
The FTSE 100’s sharp decline last week, leaving it 10% below its peak in April, certainly won’t lift consumers’ spirits but it is unlikely to be large enough to dissuade them from continuing to spend more either. The relationship between equity prices and …
21st August 2015
July’s public borrowing figures showed that the public finances are now benefitingfully from the economic recovery’s strength. But at this early stage of the fiscal year,it is too soon to conclude that the second phase of the fiscal squeeze is going to …
July’s retail sales figures showed that the pace of spending growth on the high street moderated at the beginning of Q3. But we doubt that this signals a more widespread slowdown in the consumer recovery. … Retail Sales …
20th August 2015
The decline and underperformance of the FTSE 100 has not reflected building concerns about the UK’s economic outlook but rather the impact of recent events in China. The FTSE 100 is comprised to a greater extent than most other advanced economy benchmarks …
19th August 2015
The small rise in CPI inflation from 0% to 0.1% in July merely reflected the slightly earlier conclusion of summer discounting of clothing this year compared to last and so has little bearing on the likely timing of the first interest rate rise. …
18th August 2015
Headlines have recently been captured by last week’s shock move by the People’s Bank of China to lower the daily reference rate for the renminbi . However, we doubt that this will have much bearing on either the economic recovery, or the outlook for …
14th August 2015
CPI inflation probably held steady at zero in July, but the recent fall in oil prices suggests that the UK is likely to experience another bout of negative inflation before the end of the year. Meanwhile, domestic price pressures are still weak, …
The latest labour market figures supported the current consensus view on the Monetary Policy Committee that interest rates do not need to rise before the end of the year. … Labour market data …
12th August 2015
Strong growth in household spending this year will give way to a weaker performance in 2016. But this slowdown will not be severe and the medium-term outlook is bright. … Recovery unlikely to slow sharply next …
11th August 2015
