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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 …
29th July 2010
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 …
The renewed falls in mortgage market activity are weighing on house prices. With lending unlikely to pick up significantly this year, due to constraints on both supply and demand, recent falls in house prices are unlikely to prove short-lived. … Mortgage …
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 …
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 UK banks look likely to receive a relatively clean bill of health in the stress tests, tha is unlikely to have much of an impact on the outlook for the economy. After all, while recent weeks have seen some signs of renewed concerns over the …
26th July 2010
Today’s paper on financial regulation beefs up the Government’s plans to expand the Bank of England’s toolkit. But there are still big uncertainties about how this will operate in practice, while the paper on company finance underlines that there is no …
The UK economy grew significantly more quickly than expected in the second quarter of the year. But there are still good reasons to expect the recovery to be pretty lacklustre in the coming quarters. … Preliminary GDP …
23rd July 2010
Recent press reports have suggested that the Government may be considering an early sale of some of its banking sector assets. However, any sales are unlikely to improve the fiscal outlook and may make the aim of boosting bank lending harder to achieve. … …
22nd July 2010
Consumers do not appear to have let concerns about the fiscal squeeze affect their spending too much yet. Nonetheless, there are some signs that the spending recovery is starting to lose momentum. And the sheer scale of the looming tax rises and …
June’s official retail sales figures suggested that the prospect of the sharpest fiscal tightening in decades hasn’t stopped consumers spending yet. But we doubt that this strength can last. … Retail Sales …
We expect the fiscal tightening to leave real household disposable incomes falling by 1% next year and stagnating in 2012 the tightest squeeze since the mid-1970s. As a result, we no longer expect consumer spending to start rising in 2011 and instead …
21st July 2010
This report is only available as a PDF. Click to download. … MPC Minutes (Jul.) …
June’s public finances figures put something a dent in recent hopes that the fiscal position is now on a clearly improving path. … Public Finances …
20th July 2010
Last week’s rise in core inflation suggested that the spare capacity in the economy still isn’t having much of an impact. Core goods inflation is now on a downward trend – but is being offset by a rise in services inflation. … Pick-up in services …
19th July 2010
The new coalition Government has made an industrious start. But it still faces some major policy challenges if it is to achieve the multiple goals of sorting out the public finances, improving financial stability, keeping inflation low and securing the …
15th July 2010
One of the Government’s biggest economic challenges is getting the banks to lend more, with the major banks reportedly meeting with the Chancellor today to discuss the issue. In the near-term, this is likely to involve toughening up the lending targets …
The UK labour market is starting to benefit from the recovery in the wider economy. But we still doubt that private sector hiring will be able to offset the sheer scale of the looming public sector job cuts. … UK Labour Data …
14th July 2010
The further fall in headline inflation in June suggests that there is still little pressing need for an interest rate rise. But with core price pressures remaining stubborn, inflation nerves will remain for a while yet. … UK Consumer Prices …
13th July 2010
Data released last week supported the view that, while the economy probably grew at a solid pace in the second quarter, that may be as good as it gets as far as the pace of the UK economic recovery is concerned. … As good as it …
12th July 2010
Q1’s national accounts highlighted the fragility of the recovery seen so far. We still doubt that the economy is in good enough shape to withstand the fiscal squeeze that is about to start in earnest. … National Accounts & Balance of Payments …
May’s trade figures continued the recent run of disappointing news on the UK recovery. But at least price pressures in the industrial sector appear to be easing. … UK Trade …
9th July 2010
Today’s no-change decision confirms that the majority of the Monetary Policy Committee (MPC) still sees no pressing need to tighten monetary policy. With the biggest fiscal squeeze in decades getting underway, we think that the economy needs all the …
8th July 2010
May’s UK industrial production figures added to recent tentative evidence that the pace of economic recovery may have peaked in the second quarter. … UK Industrial Production …
Already we’re starting to get a feel for just how nasty the effects of the looming cuts in government spending will be. The OBR last week revealed that it expects over 600,000 public sector job cuts over the next five years (compared to our own estimate …
5th July 2010
June’s UK CIPS/Markit report on services provided further evidence that the recovery in the largest sector of the economy has lost momentum since the start of the year. … CIPS/Markit Report on Services …
The £40bn of additional fiscal tightening announced in June’s emergency Budget takes the total tightening to some £128bn by 2015/16, the equivalent of some 8% of GDP. (See Chart.) With the private sector unlikely to compensate fully, we continue to think …
1st July 2010
June’s UK CIPS/Markit report on manufacturing confirms that the recovery in the industrial sector remains robust. But with export orders stalling and credit conditions still tight, the prospects for the broader economy are far less encouraging. … …
The Monetary Policy Committee (MPC) is getting increasingly nervous about the current rise in inflation, as evidenced by Andrew Sentance’s vote for an interest rate rise last month. However, most members still seem prepared to wait and see if the spare …
After outstripping income growth for over a year now, house price gains more or less stalled in June. The impact of the fiscal squeeze on incomes and confidence is likely to drive house prices back down again over the next 18 months. … Nationwide House …
30th June 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. … Nationwide House Prices …
Growth of the Monetary Policy Committee’s favoured measure of the money supply has continued to pick up pace, but we doubt that this means that a strong pick-up in money spending is soon to come. … Monetary Indicators Monitor …
29th June 2010
The latest mortgage lending numbers from the Bank of England were little changed from last month, indicating a lending market that remains very subdued. … Mortgage Lending …
Last week’s tougher than expected Budget has helped to ease market concerns about the UK’s fiscal outlook, but it won’t eliminate them altogether. For a start, the vast bulk of the planned fiscal squeeze will come in the form of spending cuts which will …
28th June 2010
Given that the Bank of England has been criticised for not shouting loudly enough about the risks of a banking crisis, the gloomy tone of its latest Financial Stability Report (FSR) is perhaps unsurprising. That said, we agree with its message that the …
25th June 2010
The minutes of June’s Monetary Policy Committee (MPC) meeting showed that a divide is starting to open up about the risks to the inflation outlook. But most members still seem to believe that the slack in the economy will bring inflation down from its …
23rd June 2010
22nd June 2010
Fears that a rise in capital gains tax would rapidly destabilise the fragile house price recovery appear to have been overdone. But the scale of the fiscal squeeze announced by the Chancellor today was, if anything, tougher than had been anticipated. And …
This checklist is intended to help clients keep track of the important measures and numbers announced during the Chancellor’s Budget speech at 12.30pm and to provide some instant context. … UK Budget …
Last week’s interim forecasts from the Office for Budget Responsibility (OBR) sprung something of a surprise in revealing a lower projected path for public borrowing over the next five years than that presented by Alistair Darling back in March. … The …
21st June 2010
May’s public finance figures continued the recent run of slightly better than expected news on the fiscal position. But the big picture is still that a major fiscal squeeze looms, with tough measures set to be announced in Tuesday’s Budget. … Public …
18th June 2010
There is clearly a strong chance that Tuesday’s emergency Budget contains a rise in VAT. While this might make the MPC’s job a bit trickier, we doubt that it would push the Committee into raising interest rates prematurely – especially given the adverse …
17th June 2010
Although the latest news has been mixed, consumer spending on the whole appears to be holding up well. But there are other signs that cracks in the recovery are appearing, including recent falls in consumer confidence and borrowing. With the emergency …
