The podcast that keeps you up to date with what is happening economy-wise in Northern Ireland. Telling you what you need to know but not necessarily what you want to hear. It is better to be prepared for the economic environment we are operating in and not the world we would like to be in.
Featuring John French, Chief Executive at Utility Regulator
Inflation is still running at more than three times the 2% Bank of England target, interest rates are biting, and consumer confidence has fallen, perhaps in response to the emergence of new geopolitical turmoil. While there is optimism that inflation will decline in the months ahead, the Bank of England is watching closely for signs of domestically generated price pressures. And like the rest of us they nervously follow headlines from the Middle East.
A disappointing week for UK economic data. Underlying momentum in GDP growth is modest, firm confidence about growth is diminishing, and high-frequency data show sluggish activity. While rates are biting for households and the housing market. Are we seeing those famous ‘long and variable lags’ in monetary policy affecting economic activity at work?
Financial markets globally are taking in the “higher for longer” rhetoric. But non-market sentiment on the subject, be it economists or firm owners themselves, remain diverged. Firms’ expectations of prices and wage growth are coming down steadily. Further, the impact of already-announced rate hikes is just starting to be felt. Should it become apparent that the Bank of England has done too much, rate cuts may be upon us sooner than we expect.
Today sees the release of September data from the Ulster Bank Northern Ireland PMI®. The latest report – indicated that the private sector remained in a downturn as output and new orders fell again. More positively, employment continued to increase, contrasting with the UK-wide trend. Input costs and output prices continued to rise, but at rates that were much weaker than seen over the past three years.
Last week’s upbeat revisions to the UK’s economic performance in the first half of the year, whilst encouraging, brings little joy, as the impact of high interest rates on the economy continues to build. With the cost of credit rising, this is the best time for many households to rebuild their depleted savings. Mix in some election uncertainty and businesses too will likely postpone their investment decisions. All combined, it’ll keep growth subdued.
The podcast that keeps you up to date with what is happening economy-wise in Northern Ireland. Telling you what you need to know but not necessarily what you want to hear. It is better to be prepared for the economic environment we are operating in and not the world we would like to be in.
Featuring Anastasia Desmond, Assistant Economist at Ulster University Economic Policy Centre
If we went back in time to the 1970s or 80s, Northern Ireland was throwing money to attract single investors like DeLorean to help address chronic unemployment. Even getting them interested in speculative visits was a difficult ask and for many, no amount of sweeteners made investing in NI an attractive proposition.
Policy tightening across the globe is nearing its end. The Bank of England (BoE) and Federal Reserve (Fed) paused their respective rates hiking cycles last week, while the ECB signalled a final hike the week prior. At home, the vote was rather close, 5-4, and the MPC’s guidance suggested they are maintaining optionality about future hikes. Globally, the prolonged monetary tightening phase has constrained the growth outlook for this year and next.
So far the Bank of England’s rate hiking cycle had been made somewhat easy by the UK’s strong economic performance. But MPC members perhaps shifted in their chairs as last week’s data releases told a story of fading economic momentum and a cooling labour market. However, wage pressures remain intact, and inflation expectations have edged up. Oil’s been on an upward march of late, feeding higher prices at the pump: petrol’s at its highest level since last December. Lots to ponder ahead of Thursday’s rate decision.
