Chief Economist’s Weekly Briefing – Euro Vision

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For years now it has been a struggle to find anything positive to write about the Eurozone economy. Plagued by slow growth, high unemployment and intermittent sovereign debt crises it has been the developed world’s economic problem child. It’s too early yet to declare victory in the war against poor economic performance but there are signs that the region is staging a sustained, if modest recovery. Continue reading

Chief Economist’s Weekly Briefing – Pesky

London 2.jpgNot for the first time, it appears inflation is making a bit of nuisance of itself. There was more evidence last week that the consumer is feeling the squeeze and its having a knock-on effect for growth.

Slower, part 1. The UK economy grew by 0.3% in Q1, down from 0.7% in Q4 2016. Weaker growth was caused mainly by a fall of 0.5% in the output of the retail and accommodation services sectors. If there’s such a thing as a good slowdown this was it. Higher inflation is squeezing incomes leaving people with a choice: run down their savings and borrow so as to sustain consumption or tighten their belts. These numbers suggest we’ve done the latter. Continue reading

Chief Economist’s Weekly Briefing – Getting better all the time

London_Eye_sunset_study_-_P1040370.jpgWhether it’s booming car sales or rising job satisfaction the data says the UK is in a good place. Or maybe that’s the after effects of a sunny weekend…

Service charge. Nine months on from the EU referendum result, the UK’s service sector hasn’t lost its mojo. According to the March PMI the sector notched up its fastest rate of growth for the year with an overall score of 55, up from February’s 53.3. Firms remain very optimistic for the future but inflationary pressures remain a concern. Input cost inflation eased last month relative to February’s near 8-1/2 year peak but still remain high. Passing these costs on to customers through higher charges remains a priority, sharpening the focus on this week’s inflation data. Continue reading

Chief Economist’s Weekly Briefing – Happy birthday to EU and goodbye

Sterling is down 12% since the referendum and some effects of its decline are becoming apparent.

Pound.jpgPipeline pressures. Sterling’s weakness has fuelled import cost inflation. Manufacturers’ raw material costs rose by 19% y/y in February and firms have been passing some of these costs on to customers. Back in June factory gate prices were falling on an annual basis. Subsequently, output price growth has accelerated in every single month. Last month they were up 3.7% y/y the largest increase since December 2011. Price rises were evident across all product categories from food to fuel. Consumers have been warned. Further price rises are coming. Continue reading