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This report is only available as a PDF. Click to download. … QE2 being readied for launch …
9th September 2010
July’s dreadful trade figures cast further doubt over the ability of the external sector to drive the recovery once the boost from government and consumer spending fades. … UK Trade …
rally in the pound has fizzled out over the last few weeks. But with concerns over the euro-zone likely to re-surface before too long and the UK set to press ahead with a decisive fiscal tightening, the pound could yet make further considerable gains …
8th September 2010
July’s manufacturing output figures defied the rather gloomier tone of some of the recent industrial surveys. Still, there are good reasons to expect the industrial recovery to lose at least some steam over the coming months. … UK Ind. Production …
The latest rise in the Halifax measure of house prices does little to settle the debate about the house price outlook. But the fact that house prices continue to fall on a quarterly basis seems consistent with our forecast of considerable weakness in …
The apparent lack of a “plan B” for the public finances should the economy be weaker than the Government expects supports our forecasts of sluggish growth and further monetary loosening. … "Plan B" is to bank on the …
6th September 2010
With the economic recovery flagging, attention is turning to what further support policymakers can provide. While there are question marks over whether further central bank asset purchases would actually do any good, we think that the Monetary Policy …
Last week didn’t look likely to be a particularly memorable one as far as domestic news is concerned. But it’s just possible that it will turn out to be the week when the threat of a renewed recession in the UK economy first started to look very real. … …
August’s CIPS/Markit Report on Services echoed the sister reports on manufacturing and construction already released this week in signalling a sharp slowdown in growth across the economy. The dangers of a double-dip are growing alarmingly. … UK …
3rd September 2010
There are still few signs that the Monetary Policy Committee (MPC)about to change policy in either direction any time soon. We expect interest rates and the asset purchase programme to be left unchanged again at the forthcoming meeting. … MPC stays …
2nd September 2010
The renewed downturn in house prices signalled by today’s Nationwide index is unlikely to be short-lived. Not only is the market still significantly overvalued on most measures, but the lack of mortgage credit and the weak economic outlook also point to …
October’s rise in the Halifax house price index was widely expected, given the size of the previous month’s drop. Moreover, although far stronger than consensus estimates for a 0.6% rise, the underlying trend still points to accelerating house price …
While the economy expanded strongly in the second quarter, further signs have emerged that growth has since slowed. And the breakdown of Q2 GDP casts additional doubt over the sustainability of the recovery. (See Chart.) Growth was driven by re-stocking, …
1st September 2010
The message from August’s CIPS/Markit Report on manufacturing that the recovery in the industrial sector is losing steam supports our view that overall economic growth is likely to disappoint again in the coming quarters. … CIPS/Markit Report on …
The Bank of England’s mortgage lending statistics for July showed a marginal rise in both the value and volume of mortgages approved. However, the bigger picture is still of subdued activity in the housing market. There is little chance of a marked …
31st August 2010
Firms’ pension funds are still not looking particularly healthy. And a renewed slowdown in the economy could offset any benefits to pension schemes from proposed changes in inflation rules. … Pension funds vulnerable to renewed economic …
The pick-up in the Monetary Policy Committee’s preferred measure of money supply growth has continued to fade. With bank lending so weak, the improvement never looked likely to last. … Monetary Indicators Monitor …
After a weak start to the year, the subsequent modest improvement in the housing market has recently begun to peter out. It may be that this is nothing to worry about, especially given that the wider economic environment has become more supportive. But we …
30th August 2010
The second estimate of UK GDP revealed that the economy expanded even more quickly than previously estimated in the second quarter. But the figures cast further doubt on the sustainability of the recovery. … GDP: Output, Income and Expenditure …
27th August 2010
Our long-standing bullishness on UK government bonds (or gilts) was further borne out last week when ten year yields slipped through our target of 3%. Gilts have been supported by overseas developments, but market worries over the domestic inflation …
23rd August 2010
Not only did the latest UK data suggest that the fiscal position is tentatively improving, but it looks like the slowdown emerging in the wider economy has not spread to the high street yet. … UK Retail Sales & Public Finances …
19th August 2010
The recovery in the overall economy appears to be softening. And although the high street appears to doing well for now, we doubt that consumer spending will be far behind. Consumer confidence appears to be on a downward trend. And the improvement in the …
The minutes of August’s Monetary Policy Committee (MPC) meeting suggested that policy is unlikely to change – in either direction – for some time yet. But we still think that a further policy loosening is likely, perhaps at the start of next year. … MPC …
18th August 2010
The MPCs preferred measure of the money supply has recently started to grow at the rates the Committee was aiming for when it began its policy of quantitative easing (QE). However, we would be wary of reading too much into this improvement. … Is QE …
17th August 2010
July’s consumer prices figures should provide some reassurance that underlying price pressures in the UK economy are finally starting to ease. … UK Consumer Prices …
July’s consumer prices figures should provide some reassurance that underlying price pressures in the UK economy are finally starting to ease. … Core price pressures finally starting to …
The distinctly dovish tone of last week’s August Inflation Report begs the question of whether the Monetary Policy Committee is damaging the credibility of the policy framework by deliberately turning a blind eye to persistently strong price pressures. … …
16th August 2010
The Bank of England’s August Inflation Report confirmed that the MPC still expects inflation to fall back sharply once temporary upward forces fade. As such, a policy loosening still looks more likely than a tightening in the foreseeable future. … Bank of …
11th August 2010
The latest UK labour market figures showed that employment is rising strongly now that the wider economic recovery has gained some momentum. But the looming fiscal squeeze suggests that this will be only a brief respite. … UK Labour Data …
June’s trade figures were better than expected, but it still looks unlikely that the external sector will be able to offset the weakening already emerging on the consumer side of the economy. … UK Trade (Jun.) & BRC Retail Sales Monitor …
10th August 2010
The interim results published by the major UK banks last week showed that RBS and Lloyds are on track to meet their new lending commitments to the Government. But these lending targets have become pretty meaningless. The big picture is that net lending to …
9th August 2010
The latest data on UK industry suggest that, for now at least, both activity and cost pressures in the sector remain pretty strong. But there are good reasons for expecting both to weaken somewhat over the coming months. … UK Ind. Production (Jun.) & …
6th August 2010
Today’s decision to leave interest rates on hold again presumably reflected growing signs that the recovery in the UK and global economies is running out of steam. With an enormous fiscal squeeze ahead, we still expect monetary policy to stay extremely …
5th August 2010
July’s UK CIPS/Markit report on services provided further evidence that the economic recovery has cooled since the strong 1.1% quarterly rise in GDP in Q2. … UK CIPS/Markit Report on Services …
4th August 2010
House prices rose in July, reversing some of the recent falls. But this does not alter our view that prices are set for a period of considerable weakness in the remainder of this year and into 2011. … Halifax House Prices …
The fiscal contraction is now well and truly underway. However, we doubt that the conditions are in place for the economy to take such a sharp squeeze in its stride. … Can the UK survive the squeeze? (Q3 …
3rd August 2010
You could be forgiven for being puzzled by the recent data on consumers. After all, figures released last week on retail spending and the housing market gave markedly different signals on the current health of and outlook for household spending. … How …
2nd August 2010
The sheer scale of the fiscal squeeze means that consumer spending will struggle to rise in the next few years. … Spending will struggle to grow during fiscal squeeze (Q3 …
The economy managed a much stronger than expected expansion in the second quarter, with GDP rising by 1.1%. (See Chart.) However, this is likely to be as good as it gets for this stage of the economic recovery. Timelier measures of activity such as the …
July’s UK CIPS/Markit report on manufacturing brought further evidence that the recent impressive recovery in the industrial sector of the economy is beginning to lose a little bit of steam. … CIPS/Markit Report on Manufacturing …
The subdued picture of lending activity was reinforced today as mortgage approvals for house purchase recorded their largest fall for five months. Although we doubt approvals will fall significantly further from here, we see little immediate prospect of a …
29th July 2010
The recent pick-up in the Monetary Policy Committee’s favoured measure of the money supply may already be fading. Meanwhile, bank lending is still struggling to rise. … Monetary Indicators Monitor …
The drop in the Nationwide house price index in July was hardly a surprise given the generally downbeat signs from other housing market data over the past few weeks. But it adds to the growing body of evidence that the past year’s house price gains have …
There are still few signs that Andrew Sentance’s view that interest rates need to rise is gathering much support from the rest of the Monetary Policy Committee (MPC). In fact, the minutes of the last meeting contained the strongest steer for a while that …
