Northern Ireland’s Labour Force Survey (LFS) has been a source of record breaking highs and lows of the positive variety over the last two years. More recently, Q1 2018 witnessed an all-time low unemployment rate of 3.1% with a record number of people in work in the three months to May. However, the subsequent data has seen rising unemployment coupled with a falling number of people in work.
UK growth has picked up a bit of speed in Q3, judging from latest monthly GDP figures, with strength widespread. However, recent favourable weather flattered the headline rate, so a moderation in growth looks likely in Q4.
If Philip Hammond has learned from the history of taxation, we could see some interesting developments in the October 29th Budget.
When we look back at some of the taxes we’ve had in the past, it is clear that taxation has had to continually change to keep pace with the times. In 18th century Britain, a hat tax was introduced to raise revenue from the gentrified. It was effectively a stamp duty on the head-dress of the more wealthy – the bigger the hat, the bigger the tax. Top hats had a top rate of 14%.
Candles were also viewed as an extravagance in Georgian England and therefore drew the interest of the exchequer, leading to the introduction of a candle tax. Similar taxes to target the wealthy at the time included, a beard tax introduced by Henry VIII, or an 18th century window tax (the bigger the house, the more windows it would have and the more tax the owners would pay). Continue reading
Latest monthly UK PMI surveys were upbeat, hinting at firmer Q3 GDP. Increasing skill shortages suggest a pick-up in wage growth in coming months, supportive for cash strapped consumers.
The UK recovery remains imbalanced. Consumer spending rebounded in Q2 but investment weakened. Ongoing Brexit uncertainty continues to overhang the corporate sector.
Stronger than expected UK inflation data increases the odds of another modest BoE rate hike next year, but the impasse in latest EU/UK Brexit talks means a BoE move is unlikely before spring 2019, at the earliest.
The US economy is humming and wage pressures are building, keeping the Fed on track for another modest tightening in September. UK growth, however, remains lacklustre with manufacturing in the doldrums. A BoE rate hike appears a distant prospect.
The UK’s encouraging fiscal position provides Chancellor Hammond with more room for manoeuvre in his upcoming autumn statement.
UK growth rebounded in Q2, but outlook is clouded
Today sees the release of July data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – pointed to marked increases in both output and new orders amid an unusually long spell of warm weather. That said, employment increased only slightly and business confidence eased. The rate of input cost inflation remained sharp, leading output prices to rise at a pace only slightly weaker than June’s ten-year high.