UK Economy
Highlights
Green shoots continue to appear
Survey evidence has continued to improve during Q2. The PMI surveys for manufacturing and services have bounced, while the CBI surveys have reported that firms' expectations for future trends are much less downbeat than in recent months. Past relationships between official data and survey evidence point to a quarter-on-quarter decline in GDP in Q2 which is far less than that reported in Q1.
12 June 2009
QE - is it still the solution?
This week the MPC voted to maintain base rates at 0.5% and to continue to pursue its plans to complete £125bn of quantitative easing (QE) in the coming two months. However the policy of QE has come under renewed scrutiny following Chancellor Merkel's attack and the release of new data which provides scant evidence of any impact on the money supply thus far. In our view the concerns about the effectiveness of QE are premature, though we would not be surprised to see the policy extended to the full £150bn and there is a good chance that the Bank will approach the Treasury for permission to extend it still further.
5 June 2009
S&P warning reignites UK fiscal policy debate
The announcement that Standard & Poor's had downgraded its outlook for the UK from stable to negative has reignited the debate about the state of the public finances. The Chancellor's decision not to present a credible medium-term plan for the public finances in the Budget is central to this issue, with S&P sharing our view that - without substantial policy tightening - government debt levels are likely to continue to rise over the medium term
29 May 2009