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The latest Inflation Report indicated that the Monetary Policy Committee (MPC) has become a bit more optimistic on the growth outlook. This, alongside its continued expectation of a further rise in inflation in the near-term, means that the MPC is set to …
15th May 2013
Following recent positive news on the economy, the latest UK labour market data provided something of a reality check. Admittedly, a fall in headline employment and a rise in unemployment disguised some less gloomy developments. But further weakening in …
Tourism is an important but often overlooked source of UK export earnings, with overseas visitors spending over £18bn annually in the UK. Increasing numbers of visitors from fast-growing emerging economies are helping to reduce the tourism industry’s …
14th May 2013
There has been a fair bit of excitement about the renewed signs of life in the economy. We would be wary of getting too absorbed in the ebb and flow of the data. Indeed, it is still hard to see what could drive a sustained upturn in the near-term. …
13th May 2013
Recent Inflation Reports have presented a pretty gloomy picture as far as the prospects for inflation are concerned. But May’s Report, to be published on Wednesday, should break this bad run. … Inflation Report may not impede further …
Following last week’s decent business survey results, March’s trade data provided more good news, with net trade likely to have added modestly to GDP growth in the first quarter. But while key export markets in the euro-zone remain very weak, significant …
10th May 2013
The Monetary Policy Committee’s continued inaction shows it has limited appetite for helping the economy to break out of its current insipid state. Upon his arrival in July, Mark Carney may have his work cut out in persuading the Committee of the merits …
9th May 2013
March’s industrial production figures suggest that the economic recovery gained some momentum towards the end of the first quarter. But there are various reasons to think that this impetus will not be sustained. … Industrial Production …
While we think that we’ve done a pretty good job of forecasting the economy recently, we readily admit that our record of forecasting inflation has left a lot to be desired. Given the apparently weaker link between spare capacity and inflation, we are …
8th May 2013
This year’s earlier Easter was primarily to blame for April’s dip in the BRC measure of retail sales. Nonetheless, underlying sales growth still looks fairly limp … BRC Retail Sales Monitor …
The squeeze on consumers’ real pay will intensify even further over the next few months. Thereafter it should abate, although sub-par rates of spending growth are likely to continue for some time. … The squeeze …
7th May 2013
Mervyn King looks unlikely to get his wish for more asset purchases fulfilled before he leaves at the end of June. Hopes therefore rest on Mr Carney spurring the Committee into action when he arrives in July. … King unlikely to get his way before he …
Rumours that the Government is gearing up to sell its stakes in the nationalised banks have hit the headlines. Some think that even a loss-making sale would support the Government’s chances of re-election. But a sell-off would be no quick fix for either …
6th May 2013
An improvement in April’s CIPS/Markit report on services joined the upticks already seen in the manufacturing and construction surveys in suggesting Q2 has got off to a good start. But even with these positive signs, there is still little indication of …
3rd May 2013
There are some tentative signs that the economy is beginning to turn a corner. With GDP growing by 0.3% on the previous quarter in Q1, the economy comfortably avoided a triple-dip recession. And while this growth depended on an expansion in the services …
2nd May 2013
Companies have been reluctant to spend so far in this recovery. And legislation that is being phased in which requires them to contribute to their employees’ pensions could restrain them further. While to some extent firms can mitigate the hit to their …
1st May 2013
April’s CIPS manufacturing survey offers a glimmer of hope that the sector’s recession might be coming to an end. But stagnation, rather than outright expansion, may be the best that manufacturers can hope for this year. … CIPS/Markit Report on …
The very slight drop in house prices recorded in April points to a housing market holding its ground. While prices in London are likely to see some further gains in coming months, prices for the UK as a whole will struggle to see any increase. … …
The latest money and lending figures contained a few positive signs that the Funding for Lending Scheme (FLS) is having a positive impact on borrowing, including the first rise in lending to SMEs in nearly two years. But overall, the impact of the FLS has …
30th April 2013
March’s household borrowing figures saw a continuation of the modest expansion of credit seen in recent months. But there remains little sign of any move back to the pace of borrowing seen prior to the financial crisis. While the Funding for Lending …
After two consecutive months of declines, mortgage approvals for house purchase staged a partial come back in March. A raft of Government interventions is likely to lead to further marginal increases in mortgage lending over the coming months. … …
April’s slight fall in the level of consumer confidence provides further evidence that the consumer sector won’t see a meaningful recovery this year. With employment falling and real pay contracting, we expect consumer spending will remain in the doldrums …
The fact that the official measure of employment is now above its pre-recession peak, while GDP is still about 2.5% below its former high point, calls into question the reliability of the figures. We believe the GDP figures, although imperfect, are still …
29th April 2013
Last week’s revelation that GDP expanded by 0.3% in Q1 will have brought relief to the Chancellor and was a welcome piece of good news following a long period of generally gloomy economic data. But the economy will struggle to repeat Q1’s performance in …
By posting a better than expected 0.3% quarterly expansion in the first quarter, the UK has comfortably avoided a triple-dip recession. As the Chart shows, the big picture is still one of broad stagnation, but at least the economy is tentatively starting …
25th April 2013
The fall in April’s CBI Distributive Trades Survey provides further reason to think that the pick-up in the consumer sector earlier this year was just temporary. With employment now falling and the squeeze on real pay intensifying, retailers face an …
24th April 2013
Today’s modifications to the Funding for Lending Scheme should make it a more effective tool in reducing the cost of loans for small companies. But with banks undercapitalised and the demand for credit still weak, the announcements improve the overall …
The latest CBI Industrial Trends survey has continued to present conflicting signals on the health of the manufacturing sector. All things considered, we would place more weight on its downbeat signals, given that they corroborate other evidence. … CBI …
23rd April 2013
From the Chancellor’s perspective, March’s public finances data delivered some good news, with underlying borrowing for 2012/13 coming in below 2011/12’s level. But the big picture is that the Government still ran an underlying deficit of almost 8% of …
After what seems like a lifetime of speculation, we will finally get the official verdict this week on whether the UK is in a triple-dip recession or not. We still think that the chances of a further contraction in GDP in the first quarter are pretty much …
22nd April 2013
The labour market’s recent deterioration threatens to nip the nascent recovery in consumer spending in the bud. Employment has begun to fall again and the forward-looking surveys suggest no imminent improvement. Meanwhile, pay growth has ground to a halt. …
19th April 2013
March’s fall in the official measure of retail sales volumes was unsurprising given that month’s unusually severe weather. This still left sales up in the first quarter of 2013 as a whole. Nonetheless, shoppers may not be enough to save the economy from a …
18th April 2013
The Monetary Policy Committee (MPC) still seems to be in a state of paralysis ahead of the new Governor’s arrival in July, despite indications that the weakness of the economy is finally starting to affect the labour market. … MPC Minutes (Apr.) & Labour …
17th April 2013
While CPI inflation rate was unchanged at 2.8% in March, it still looks set to climb over the summer. Nonetheless, the recent fall in oil prices has brightened the outlook for inflation further ahead. … Consumer Prices & Producer Prices …
16th April 2013
High street spending has put in a reasonable performance since the start of the year. And there are at least some conditions in place that might allow the momentum in consumer spending to build further. But major headwinds remain. So we doubt that we are …
15th April 2013
In the subdued retail environment of recent years, one bright spot has been rapid growth in online sales. Even in the difficult conditions in 2012, internet purchases grew by 15%. With 90% of sales still store-based and internet penetration far from …
10th April 2013
Given the controversy about the tax and benefit changes introduced in recent days, the point that these measures are in aggregate putting some cash in households’ pockets has been overlooked. That said, the amount is small and unlikely to stop consumer …
9th April 2013
While February’s industrial production and trade figures increased the chances that the economy has just about avoided a so-called triple-dip recession, they hardly painted a picture of strength. … Industrial Production & Trade …
Against the recent awful weather, March’s BRC Retail Sales Monitor delivered a reasonably positive result. While the timing of Easter will have provided a boost to March’s figure, sales in Q1 as a whole seem to have gathered some momentum. But whether …
As the UK struggles to grow, she can only look on with envy at the budding recovery in the US. The UK will continue to lag behind for the foreseeable future. But further ahead, she should be able to close much of the gap that has opened up with the US …
8th April 2013
Recent developments in Japan, with a new central bank governor and the unleashing of radical monetary policy measures, may offer hope for the UK as Mark Carney’s arrival moves closer. … Does Japan offer hope for a stagnating …
Any progress the economy was making towards becoming less dependent on unsustainable sources of growth has stalled. Until the euro-zone economy stabilises, an export-led and hence better-balanced economic recovery in the UK looks set to remain elusive. …
4th April 2013
Although the Monetary Policy Committee left policy on hold again today, we suspect that the decision was still a close one. And while the chances of more asset purchases in May have perhaps declined, we still think that Mark Carney’s arrival in July could …
The modest uptick in March’s CIPS/Markit report on services still suggests that GDP did no better than flatline in Q1 and that a triple-dip remains a risk. The faint signs of life in the economy may nevertheless cause the MPC to stay its hand at today’s …
There is growing talk about the ‘zombification’ of the UK economy, with unviable companies locking up resources and impeding bank lending to new firms. But an economic recovery could well reveal ‘zombie’ firms to be in better shape, and if loans to such …
3rd April 2013
The Bank of England’s latest Credit Conditions Survey indicates that the Funding for Lending Scheme is still having a positive impact on the supply and cost of credit. But even if lenders follow through on their promises to make more credit available, it …
The number of people aged 65 and over is set to increase by more than 4.5m by 2030. While this group currently accounts for less than £1 in every £5 of total spending, this share might rise to £1 in every £4 within two decades. There will be winners and …
The slower growth in the broad money supply in February suggests that the previous month’s pick-up was just a blip. Meanwhile, bank lending to the private sector is still flat-lining, adding to the early disappointing evidence on the impact of the Funding …
2nd April 2013
February’s household borrowing figures suggested that, while mortgage lending continues to struggle, the recent signs of life evident in the consumer sector may be translating into a pick-up in consumer credit. But the impact of the Funding for Lending …
The weakness of the CIPS manufacturing survey in March suggests that the economy is continuing to make little progress towards rebalancing and has kept the threat of a so-called triple-dip recession alive. … CIPS Report on Manuf. (Mar.) & Mortgage …
