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The Government’s new pensions auto-enrolment scheme gets underway today. In its initial stages, the new contributions that some workers will start to pay will probably have only a modest effect on overall household saving. Nonetheless, this is just one of …
1st October 2012
While last week brought some tentatively positive signs regarding bank lending, the news that the UK ran a record current account deficit in Q2, thanks to an investment income deficit, was less encouraging. While the pound’s recent rise and the euro-zone …
Consumer sentiment continues to be very depressed. Admittedly, the small rise in confidence in September is consistent with the pick-up in other economic indicators in recent weeks. But the underlying performance of the economy remains weak and offers …
28th September 2012
Today figures showing that household incomes grew strongly in the second quarter were a rare snippet of good news. But the figures also revealed that consumers remain more focused on repairing their balance sheets than increasing their spending. … Rare …
27th September 2012
The slight upward revision to GDP in Q2 did not alter the big picture that output is still over 4% below its pre-recession peak. We continue to expect GDP to contract by 0.5% this year and expect only a sluggish recovery thereafter. … National Accounts & …
Last week, methodological reforms to correct long-standing deficiencies in the RPI, RPIX and CPI inflation measures became a step closer to being implemented. These reforms look set to have a big impact on the government, investors and consumers, and may …
26th September 2012
September’s CBI Distributive Trades Survey suggested that sales growth may have picked up slightly. While this is consistent with some of the other tentative signs of “green shoots” in the last few weeks, we wouldn’t read too much into it. … CBI …
The Bank of England’s latest Credit Conditions Survey suggested that lenders expect the Funding for Lending Scheme (FLS) to boost the availability of credit to households. However, the picture regarding corporate lending was less positive. … Credit …
The positive tone of most of the recent releases concerning economic activity have led some to argue that the “green shoots” of recovery have re-emerged. But, without wishing to downplay the improvement, we fear that there are at least three warning signs …
24th September 2012
August’s poor public finances figures have further increased the chances that the deficit will significantly exceed the level specified in the fiscal plans. … Public finances (Aug. …
21st September 2012
Following its fall in the second quarter, real household spending appears to have put in a stronger performance in Q3. Although retail sales volumes fell back a touch in August, spending on the high street is still on track to be higher than in the second …
While the Olympics appears to have created some winners and losers on the high street, August’s official figures show that the Games failed to provide an overall boost to retail spending. … Retail Sales …
20th September 2012
September’s MPC minutes did little to diminish the prospects of further policy stimulus over the coming months. We continue to expect further asset purchases to be announced at November’s meeting. … MPC Minutes …
19th September 2012
August’s fall in inflation suggests that July’s rise was just a temporary blip in a gradual downward trend. Barring a further rise in oil prices, inflation still appears to be on track to reach the MPC’s target of 2% before the year is out. … Consumer …
18th September 2012
On the face of it, the substantial improvement in the trade figures in July and the recent easing of financial market turmoil in some of the UK’s most important export markets suggests that the outlook for exports has brightened. However, a closer …
17th September 2012
The latest labour market figures revealed that employment has continued to grow, despite the underlying stagnation of output. However, we remain concerned that the labour market’s exceptional resilience will not last. … Labour Market Data …
12th September 2012
After announcing measures to support construction last week, today the Government has turned its attention to business investment. However, there appears to be little in Vince Cable’s “Industrial Strategy” to enable business investment to pull the economy …
11th September 2012
July’s trade data showed a surprisingly large improvement following June’s awful figures. But stripping out a reversal of some one-off adverse factors in June, and in light of recent survey evidence, this is unlikely to herald the start of the …
In this Focus, we review the way we forecast the different types of consumer spending. Slower growth of spending on essentials should allow a gradual recovery in nominal discretionary spending over the next few years. We think that leisure services and …
10th September 2012
The Government has returned after the summer break clearly keen to get on the front-foot regarding the dismal state of the economy. Perhaps the most notable aspect of the raft of announcements, though, was the lack of any statement about a more …
While July’s industrial figures showed that production bounced back fully from June’s drop, the sector still looks likely to struggle in the coming months. … UK Ind. Production (Jul.) & Producer Prices …
7th September 2012
The MPC’s decision to leave policy on hold today was unsurprising and may partly have reflected a desire to wait to see what comes out of today’s ECB meeting. We still expect more asset purchases to be announced in November and think that the Committee …
6th September 2012
Of the raft of policies announced since the Government returned after the summer break, today’s measures to boost house-building are perhaps likely to have the biggest economic impact. That said, they are unlikely to be enough on their own to get the …
The poor run of public borrowing figures and growing calls for the Government to do more to support the economy have intensified the fiscal dilemma facing the Chancellor. … Latest figures compound fiscal …
5th September 2012
August’s CIPS/Markit report on services (due tomorrow, but accidentally released early) brought some good news. Nevertheless, some bounce-back in activity in August was always possible given the Olympics and following the poor weather in July. And the big …
4th September 2012
August’s BRC Retail Sales Monitor provided more evidence that the Olympics did not provide a hoped for boost to spending. Looking ahead, factors including higher petrol prices are likely to keep a lid on high street activity. … BRC Retail Sales Monitor …
With the £50bn of extra asset purchases announced in July still underway, there is no immediate pressure on the MPC to do more this month. Nonetheless, the increasing sense of gloom about the UK’s dismal economic performance has increased pressure on …
3rd September 2012
While the activity balances of August’s CIPS/Markit report on manufacturing recovered from July’s extremely weak levels, they remained consistent with ongoing recession in the industrial sector. … CIPS/Markit Report on Manufacturing …
Recent evidence suggests that households are finding it a bit easier to cope with their high levels of debt. However, this is unlikely to last if unemployment rises as we expect. … Respite in bad debts unlikely to …
Hopes that a summer packed full of sporting and cultural events would boost consumer spending have been dampened by the weaker run of data over the past week or so. What’s more, the recent rise in commodity prices has darkened the outlook for real pay, …
Consumer sentiment continues to be very depressed. If the Olympic Games did give confidence a boost in August, this appears to have been drowned out by the gloomy economic news, particularly confirmation that the UK remained in recession in Q2. … GfK/NOP …
31st August 2012
Household borrowing recovered in July after it was depressed by temporary factors in June. Nonetheless, the big picture is that borrowing growth remains very weak. … Monetary Indicators Monitor …
Household borrowing recovered in July after it was depressed by temporary factors in June. Nonetheless, the big picture is that borrowing growth remains very weak. … Household Borrowing Monitor …
30th August 2012
Some key historical evidence does not support the view that major recessions inevitably permanently damage an economy’s supply capacity. Indeed, economies’ capacity to produce goods and services can be remarkably resilient to even catastrophic falls in …
28th August 2012
Last week brought more bad news for the Chancellor. The public sector ran a deficit in July, a month when a surplus is typically the norm. Admittedly, some temporary factors contributed to July’s poor borrowing numbers. But the public finances face more …
27th August 2012
UK GDP was revised up in the second quarter as expected, but the revision was pretty small in the big picture. The UK’s economic performance still looks dismal. … GDP: Second Estimate & Expenditure Breakdown …
24th August 2012
August’s CBI Distributive Trades Survey suggested that the Olympics did little to boost retail sales. Recent bad news on petrol and energy prices, as well as rising borrowing costs, will dampen the chances of a pick-up in sales growth later this year. … …
23rd August 2012
The recent reversal of the 25% or so fall in oil prices earlier this year and the prospect of another round of utility price rises might now mean that CPI inflation struggles to fall below the 2% target over the next year. Nonetheless, we doubt that this …
As expected, June’s unexpectedly large drop in mortgage approvals was partially reversed in July. But the rise was small, and these figures continue to highlight that tight credit conditions are compounding the effects of low buyer confidence on housing …
The Government is reportedly considering making permanent the temporary extension to Sunday trading hours for large retailers. We doubt that this would give much of a boost to overall retail spending, although it could produce some shifts in the pattern …
22nd August 2012
The return to recession and the deterioration in the public finances have put the Chancellor in a tricky position, to put it mildly. His dilemma is made even worse by the fact that, on his current plans, the pace of fiscal consolidation is supposed to …
July’s public finance figures brought no end to the underlying deterioration in the fiscal position evident since the beginning of the financial year. … Public finances …
21st August 2012
Last week brought yet more evidence that the economy did not do quite as badly in the second quarter as the preliminary GDP figures showed. That said, we have said before that only a massive revision would alter the big picture of a very weak recovery and …
20th August 2012
After a slow start, it looks like the Olympic Games have provided a reasonable boost to high street spending. … Olympics to help sales maintain …
17th August 2012
Not only did retail sales post a reasonable rise in July, but an upward revision to June’s figures added to other evidence suggesting that the preliminary estimate of GDP will be revised up next week. … Retail Sales …
16th August 2012
The minutes of August’s MPC meeting supported our view that more policy stimulus is likely before long. Meanwhile, the labour market remains puzzlingly resilient, but we doubt that this can last with the economy back in recession. … MPC Minutes (Aug. …
15th August 2012
The ONS data confirm reports from other sources that back in June, the London housing market remained strong. However we are less confident about some of the apparent strength reported for some other regions, and it is more than likely that most regional …
14th August 2012
UK inflation rose for the first time in four months in July, but the increase was driven by temporary factors. We still expect inflation to be back below its 2% target within two or three months. … Consumer Prices …
The Olympic mood was abruptly punctured by Mervyn King as he presented the Bank of England’s Inflation Report last week. Although the lower near-term profile for inflation was good news, this was overshadowed by the big downgrades to the MPC’s forecasts …
13th August 2012
Although July’s producer prices figures disclosed the first rise in input price inflation since February, we doubt that this is a sign of an emerging consumer price inflation threat. Indeed, the further fall in output price inflation suggests that …
10th August 2012
