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The consumer recovery does not seem to be based on particularly strong foundations. With real incomes falling – and likely to fall further as the fiscal squeeze hits – households are having to save a smaller proportion of their income in order to keep …
21st October 2010
September’s retail sales figures provided further evidence to suggest that consumers have begun to rein in their expenditure even before the fiscal squeeze has begun. … UK Retail Sales …
In spelling out the detail of the planned cuts in public spending, today’s Spending Review underlined the challenge the Government faces to sort out the public finances. We continue to believe that the cuts, coupled with the coming tax hikes, will be a …
20th October 2010
The minutes to October’s MPC meeting provided further evidence to suggest that the Committee is moving closer to recommencing quantitative easing, while September’s public finance figures cast further doubt on the ability of the Government to meet the …
This week’s long-awaited Spending Review will do little to alter the macro-economic landscape. We already know the overall spending plans for the next five years and, while some changes to the totals are possible, they are likely to be minor. … Spending …
18th October 2010
The sheer size of the Government’s planned reductions in public spending and the likely weakness of the economy cast major doubts on whether the cuts can actually be achieved in full. But big cuts are certainly coming and they are going to hurt. … Can the …
14th October 2010
The labour market recovery appears to be faltering, even before the public sector job cuts really begin. We stand by our long-held view that unemployment will eventually rise all the way to 3 million, possibly by 2012. … UK Labour Data …
13th October 2010
One explanation for the relatively small drop in employment during this recession is the muted pickup in company insolvencies. But a number of factors could prompt insolvencies to rise further, meaning that some of the fall in employment associated with …
12th October 2010
UK consumer price inflation remains stubbornly high. But that is unlikely to prevent the Monetary Policy Committee from providing the economy with further policy support should activity continue to disappoint. … UK Consumer Prices …
Companies may weather the coming fiscal storm rather better than households and the public sector. But they certainly won’t survive entirely unscathed. … How will companies weather the fiscal storm? (Q4 …
11th October 2010
Given the speed with which the economic upturn has been losing momentum, last week’s data came as a big relief. But although the wider economy has, for now at least, edged away from a double-dip, GDP growth still appears to have slowed to pretty …
September’s UK producer prices figures suggest that pipeline cost pressures in the industrial sector are still quite strong. But we do not expect that to prevent overall consumer price inflation from falling back over the next year or two. … Producer …
8th October 2010
7th October 2010
August’s UK industrial production figures confirmed that, for now at least, the manufacturing sector continues to defy the gathering gloom over the broader economic outlook. But industry’s resilience may not last much longer. … Industrial Production …
The hefty drop in the Halifax measure of house prices adds weight to the view that house price weakness is far from over. To our minds, weak housing market activity indicators mean that further falls in house prices are likely. … Halifax House Prices …
September’s CIPS/Markit Report on Services should, for now at least, ease fears about the risk of a double-dip in the economy. But double-dip or no double-dip, the recovery appears to have a lost a significant amount of momentum. … UK CIPS/Markit Report …
5th October 2010
He may have put it a little bluntly, but our sympathies are with Charlie Bean with respect to the comments he made about savers in an interview with Channel Four last week. Encouraging people to save less, and to spend more, is what the MPC has been doing …
4th October 2010
September’s UK CIPS/Markit report on manufacturing provided further evidence that the recovery in both the industrial sector and the wider recovery is fading fast. … UK CIPS/Markit Report on Manufacturing …
1st October 2010
The recovery is still losing momentum, with the CIPS/Markit surveys indicating that growth may grind to a complete halt by the end of the year. (See Chart.) Admittedly, the economy now seems slightly better balanced than it looked before, with investment …
30th September 2010
The Bank of England’s latest survey suggested that while credit conditions are continuing to thaw, the process remains very gradual. We do not expect lending growth to pick up pace any time soon. … Credit Conditions Survey …
Signs that the economic recovery is fading have prompted the Monetary Policy Committee(MPC)to move slightly closer to providing the economy with more stimulus. Indeed, a three way split vote looks likely this month. … MPC edging towards more …
House prices were more or less stable in September. Although it may appear that prices are stagnating at the moment, the renewed falls in mortgage market activity suggest that further declines in prices are on their way. … Nationwide House Prices …
Underlying broad money growth still looks very weak – supporting MPC member Adam Posen’s view that more quantitative easing (QE) will be required in order to boost money and credit growth and hence support overall economic activity. … Monetary Indicators …
29th September 2010
The latest mortgage lending statistics from the Bank of England show that mortgage market activity weakened once again in August. Declining buyer demand means that approvals could drop even further from here. … Mortgage Lending …
The Monetary Policy Committee (MPC) may soon relaunch its programme of quantitative easing (or QE). But this time around, the Committee could buy a rather wider range of assets. … What else can the MPC …
28th September 2010
Q2’s national accounts and balance of payments figures brought mixed signals on the fundamental health of the UK economy. There are still good reasons to be concerned over the sustainability of the recovery. … National Accounts & Balance of Payments …
After the recent run of better-than-expected news on the public finances, August’s terrible borrowing figures provided a timely reminder of the scale of the fiscal challenge that lies ahead. … Fiscal strains yet to …
27th September 2010
The Minutes of September’s MPC meeting suggested that the arguments proposed by doves on the Committee are gaining greater currency with the other members. The chances of additional monetary policy stimulus in the form of more QE have increased …
22nd September 2010
August’s public finances figures severely dented hopes that the fiscal position is on a clearly improving trend and cast doubt on the ability of the Government to deliver the fiscal tightening laid out in the June Budget. … Public Finances …
21st September 2010
Last week’s consumer prices figures showing headline inflation holding steady at 3.1% fuelled doubts in some quarters over the MPC’s long held view that spare capacity in the economy will have a strong downward influence on inflation over the medium term. …
20th September 2010
Even if employment is not actually rising quite as quickly as the official figures suggest, the improvement in the jobs market has been pretty impressive. Unfortunately, this looks unlikely to last. … Is employment really rising that …
17th September 2010
August’s fall in retail sales volumes tentatively suggested that the surprising resilience of consumer spending of late could be coming to an end. … UK Retail Sales …
16th September 2010
The pressures on consumers are mounting, with a weakening housing market now adding to the mix. And the drop in the official measure of retail sales in August suggests that consumers might finally be succumbing to these pressures – although other measures …
The latest UK labour market figures showed that while employment is still rising strongly, cracks are appearing in the recovery. We still expect unemployment to rise to 3m or so within the next two or three years. … UK Labour Data …
15th September 2010
Net trade is yet to make a positive contribution to GDP growth during this recovery – in part due to particularly strong import growth. While this is partly a welcome reflection of the recovery in domestic demand, it also looks like the weaker pound is …
14th September 2010
This report is only available as a PDF. Click to download. … UK Consumer Prices (Aug.) …
The changes in the regulatory regime currently being decided are unlikely to be the key determinant of banks lending behaviour in the near-term. But tighter regulation threatens to choke off any recovery in lending further ahead, casting a cloud over the …
13th September 2010
Tomorrow’s inflation figures are likely to show that a further rise in food prices stopped headline inflation from falling more sharply – or at all – in August. However, we doubt that rising food prices materially raise the chances either of a rise in …
Last week brought the first ‘hard’ data relating to the third quarter. Its overall message seems to be that, while growth has not fallen ‘off a cliff,’ it has probably slowed sharply since the rapid expansion seen in the second quarter. … Early signs of …
August’s UK producer prices figures brought further tentative evidence that cost pressures at the start of the inflation pipeline are beginning to ease. … Producer Prices …
10th September 2010
While the MPC predictably chose to leave policy unchanged again today, growing signs that the economic recovery is running out of steam suggest that a further bout of quantitative easing - socalled “QE2” - will be launched later this year or early in …
9th September 2010
