Chief Economist’s Weekly Briefing – Lone star

The UK economy is hardly firing when growth accelerates by half, only to reach 0.3%q/q. Yet many would settle for that given the predictions made last year. For that thank a surprisingly strong service sector that’s supporting generalised weakness elsewhere. Until the other parts of the economy start moving, growth will remain sluggish.menu-coffee-outside-cafe.jpg Continue reading

Chief Economist’s Weekly Briefing – Light relief

Does June’s unexpected fall in the rate of inflation herald the start of a retreat? It seems unlikely. The fall in sterling that has helped push inflation higher is still filtering through into consumer prices. And even at the lower rate inflation remains uncomfortably above wage growth. That’s a considerable headwind for the economy.


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Chief Economist’s Weekly Briefing – Well, where did that come from?

business-18061_1280.jpgThree members of the Monetary Policy Committee voted last week to raise Bank Rate to 0.5%, a surprise to say the least. At 2.9%, inflation is above target and heading higher. Yet while employment continues to rise, wage growth is slowing, consumers are under pressure and there is enough uncertainty around to think that tightening monetary policy can wait for a while.

Why the change of tune? Some on the MPC have been surprised by the speed with which inflation has risen and they think that stronger demand from exports and investment spending will help keep growth going, even if the consumer side of the economy is feeling the squeeze. That argument wasn’t strong enough to convince any of the Bank officials to vote for a rise and one of those who voted for a hike has now left the committee. With two vacancies to be filled the MPC’s voting position could be a lot more finely balanced than we’ve been used to.

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