Filtered by Subscriptions: UK Economics Use setting UK Economics
The MPC took a bold step with its forward guidance on interest rates last week, although the various “knockouts” left some wondering whether it created more confusion than it cleared up. Indeed, the MPC may still want to do more to stimulate the economy. …
12th August 2013
While the MPC has emphasised that interest rates will not automatically rise when unemployment reaches 7%, the Committee could arguably have been bolder in setting a lower threshold. … Could the MPC have been bolder with its …
9th August 2013
June’s trade figures suggest that the external sector is now joining in the economic recovery. But while the trade deficit narrowed, a recovery that continues to be primarily led by the consumer will suck in imports. So sustained rebalancing is likely to …
Given the headwinds that still face the economy, identifying what is driving the recent momentum in the economy is a puzzle. One factor which might be playing a role is the shifting of income by high-earners into the current tax year in order to gain from …
This report is only available as a PDF. Click to download. … Are the makers on the march? …
8th August 2013
The absence of a fall in market interest rates after yesterday’s forward guidance does not mean that the tactic has been ineffective, as evidence shows it had a significant impact before it was announced. … Impact of forward guidance is greater than it …
The MPC’s new “forward guidance” supports our view that interest rates are unlikely to rise until 2016 or even 2017, even if the recovery keeps strengthening. … Bank of England Inflation Report …
7th August 2013
The further improvement in the economy has sparked suggestions that the UK has now reached “escape velocity”. A continued strong recovery is certainly possible, but it would be complacent to assume that it is now somehow guaranteed and that policymakers …
6th August 2013
June’s surge in industrial production was the most convincing sign yet that the sector is sharing in the recovery already underway in the rest of the economy. While industry will struggle to replicate June’s strong growth, a gradual recovery in production …
The strong expansion in July’s BRC measure of retail sales suggests that the consumer recovery continued apace at the start of the third quarter. But falling real earnings and lacklustre job growth raise doubts about the sustainability of this resurgence. …
The run of generally good economic news continues. In view of the economy’s recent performance, we have raised our forecast for GDP growth this year from 0.2% to 0.8% (although we have left our forecast for 2014 at 1.5%). … Recovery still developing …
5th August 2013
Signs of life in the housing market could aid the recovery in consumer spending. But continued falls in real pay are likely to keep any near-term consumer revival subdued. … Fragile recovery finally …
With July’s CIPS/Markit measure of services activity rising to a level unseen for six and a half years, a recovery in the dominant part of the UK economy looks increasingly entrenched. While some temporary factors may have played a role in boosting …
While the recovery across the pond may have softened, momentum in the UK economy seems to be building. The extent to which the UK can keep this up will be shaped by what we learn in this Wednesday’s Inflation Report. The MPC’s decision about forward …
An expansion in ‘payday lending’ may be contributing to the recent growth in unsecured credit. But, over time, the cost of servicing a rising stock of high-interest debt will depress consumers’ spending by more than that of mainstream unsecured borrowing. …
2nd August 2013
Today’s Monetary Policy Committee (MPC) meeting was always looking likely to be a non-event ahead of the announcement about forward guidance due next week. Our best guess is that the MPC will commit to keep official interest rates low until an …
1st August 2013
July’s CIPS/Markit report on manufacturing gave the most encouraging signal to date that the industrial sector’s recovery is gathering momentum. … CIPS Report on Manufacturing …
The economic recovery has been gathering pace despite the absence of any pick-up in bank lending. We expect lending to remain weak. Although we don’t think that this will halt the recovery altogether, it will probably act as a brake on the pace of …
31st July 2013
Net new lending to commercial property was negative for the 19th consecutive month in June and we do not think that the end of the deleveraging process is in sight yet. But with wider sentiment improving, sluggish lending activity will not be enough to …
29th July 2013
The UK’s monetary indicators continue to paint a mixed picture, with respectable growth in broad money contrasting with further falls in bank lending, particularly to firms as a whole. However, a tentative pick-up in lending to SMEs suggests that April’s …
June’s household borrowing figures showed a continuation of the modest expansion in credit seen in recent months. But with mortgage approvals unexpectedly declining, evidence of a marked rise in consumer appetite for debt remains lacking, despite signs of …
The main event this month is likely to be the announcement of formal forward guidance. We expect the Monetary Policy Committee (MPC) to commit to keep official interest rates low until an unemployment threshold is breached. Any commitment will be …
The succession of sporting achievements, the sizzling summer and the Royal baby have supposedly lifted British spirits and fostered hopes that this improved sentiment will give an extra boost to the economic recovery. But a sober look at the statistics …
While all households have faced elevated inflation in recent years, the experience has not been uniform. However, differences in inflation rates are likely to be narrower over the next few years than in the past and all household types should benefit from …
25th July 2013
The first estimate of GDP in Q2 confirmed that the UK recovery is picking up pace. While there are still significant obstacles to overcome before a strong and sustained recovery is in sight, the economy is continuing to move in the right direction. … …
Although the Monetary Policy Committee left interest rates and quantitative easing unchanged at new Governor Mark Carney’s first meeting today, it took the first step towards introducing some sort of guidance on the future path of interest rates. We …
24th July 2013
The Chancellor is today meeting major lenders and housebuilders to discuss how the second (mortgage guarantee) element of the Government’s Help to Buy programme will work. While the policy has been criticised for its ropey economics, it may be more …
23rd July 2013
The main message from last week’s minutes of the latest MPC meeting was not so much a reduction in the Committee’s appetite for more stimulus, but rather a change of view on how to enact it. Meanwhile, there is an increasing body of evidence to suggest …
22nd July 2013
After being hit by bad weather earlier in the year, consumer spending appears to have made up lost ground more recently. Indeed, the consumer sector appears to be driving the wider economic recovery. … Consumer spending remains on the …
19th July 2013
The underlying picture for the public finances is one of stalled progress in deficit reduction. The Chancellor will be hoping that the nascent economic recovery will change this picture soon. But, for now, and stripping out various temporary factors, the …
June’s second consecutive monthly expansion in retail sales volumes provided further evidence that a consumer-led recovery is gaining strength. But, although consumer confidence is picking up and unemployment falling, the headwind to recovery presented by …
18th July 2013
The minutes of July’s MPC minutes suggested that the new Governor Mark Carney has united the Committee around using forward guidance rather than more quantitative easing to boost the economy. Meanwhile, the latest labour market figures showed encouraging …
17th July 2013
June’s inflation figures suggested that underlying price pressures in the economy are still fairly weak and have therefore kept the door wide open to more action from the Monetary Policy Committee at next month’s crucial meeting. … Consumer Prices & …
16th July 2013
Boris Johnson suggests closing Heathrow and building a new airport at either Stansted or the Isle of Grain. (He is distancing himself from his original ‘Boris Island’ idea.) There could be serious consequences for the M4 corridor, and perhaps other areas …
Sterling hit the headlines again last week as it weakened further against the dollar and euro. Meanwhile, last week’s slightly weaker economic data suggested that GDP growth in Q2 might not surge as much as some were starting to expect. … Sterling back …
15th July 2013
With Mark Carney having already primed expectations at July’s MPC meeting, we still expect the MPC to embark on full-blown forward guidance at its meeting next month. An unemployment threshold is perhaps most likely, but the drawbacks to using this …
12th July 2013
Following Mr Carney’s arrival at the Bank of England, the pound this week touched its lowest level against the dollar since 2010. The fact that the new Governor seems to have had no qualms about immediately jumping into forward guidance suggests that he …
11th July 2013
May’s industrial production and trade figures were something of a disappointment given the recent upbeat tone of the manufacturing surveys. Although the overall economic recovery may still have gathered pace in the second quarter, it now seems unlikely …
9th July 2013
With further expansion in June meaning the BRC’s measure of retail sales has now been positive in five of the first six months of 2013, the consumer recovery seems to be gaining an ever-firmer footing. But the longer-term sustainability of this recovery …
The continued lockstep movement of gilt and Treasury yields has called into question whether the new Bank of England Governor Mark Carney faces an impossible task trying to decouple the two. However, UK and US bond yields have diverged in the past when …
The recent jump in long-term interest rates has raised concerns over the impact of higher borrowing costs on the nascent consumer recovery. While the rise clearly isn’t helpful, the continued squeeze on real pay probably remains the bigger threat. … …
8th July 2013
In our latest UK Quarterly Review , we discuss reasons to be optimistic about the UK’s medium term outlook. Contrary to the popular belief that we are the eternal “Eeyores” of the economics world, we believe that the UK economy could yet stage a strong …
We are publishing our latest UK Quarterly Review today and the economic mood has brightened considerably since the last Review when a triple-dip was still a real possibility. Although GDP growth over the next couple of years will hardly be spectacular, we …
The list of indicators signalling that the recovery is gaining momentum continued to get longer last week. However, the recent news on the inflation outlook – which has perhaps gone relatively unnoticed – has arguably increased the scope for more …
4th July 2013
3rd July 2013
With a sharp rise in June’s CIPS/Markit measure of services activity joining further improvements in the manufacturing and construction surveys, it looks increasingly likely that GDP growth in Q2 will turn in a decent performance. While the recovery still …
The recent jump in UK government borrowing costs is hardly a welcome development in the face of a budget deficit that remains historically high. But with some rise in yields already factored into deficit forecasts and the recent climb likely to be …
2nd July 2013
Growth in consumer spending has been one of the few bright spots for the economy over the past year. But we doubt a continued consumer recovery will be that strong, at least in the near-term. In any case, consumer-led growth hardly fits with the aim of …
While broad money growth is holding firm, bank lending is continuing to contract. Although the Bank of England’s Funding for Lending Scheme appears to have stimulated consumer lending, corporate lending has yet to pick up in response to the Scheme’s …
1st July 2013
