UK Economy
Highlights
UK set for a prolonged period of sub-trend growth
The credit crunch has entered a third, more intense, phase. Despite the Bank of England reducing interest rates to 5% in April and increasing the supply of liquidity, 3-month Libor rates have risen to almost 6% and mortgage providers have been aggressively tightening their lending criteria. The repercussions of the credit crunch mean that it will become increasingly difficult to sustain the economy’s current momentum. But while a sharp slowdown in growth is inevitable, we continue to believe that a recession is highly unlikely. Instead, we anticipate a prolonged period of sub-trend growth, with GDP rising by just 1.9% this year and 2.2% in 2009.
14 April 2008
The Economic Contribution of BAE Systems to the UK
Oxford Economics has released a new study dealing with the economic impact of BAE Systems on the UK economy. The report finds that BAE Systems is a substantial contributor to the UK economy. BAE Systems employs 35,000 people with direct impacts including value added of £2.4 billion, exports of £4.1 billion, and a tax contribution of $500 million. However, when indirect and induced impacts are included, BAE's total economic impact is far greater than this. This work updates the results of past studies conducted in 2005 and 2004.
2 April 2008
UK Sectoral Overview: Growth to slow in 2008 with manufacturing disappointing again
Although GDP growth remained close to trend through to the end of last year, the deterioration in global economic conditions and recent UK housing and financial market developments are together expected to be fully felt this year. Below-trend growth is likely for much of this year, resulting in an increase in GDP of just under 2%. The adverse impact of recent developments is expected to be concentrated in construction and financial services, although all sectors of the economy will see activity and employment growth decelerate to some extent. A much more marked cycle is anticipated in construction as the weakness already evident in residential construction spreads. For financial services, growth is likely to more than halve (given the dislocation persisting in financial markets) and employment to drop, threatening to move below 1mn workers for the first time since the late 1980s.
25 February 2008