Tag Archives: UK economy

UK Economy: I told you so!! But would you listen?!

“WTF?!”

A single  swallow doesn’t make a summer! Now is the time to calm down and  inject a bit of realism into the equation!

(Reuters) – British industrial output was flat in July and there was a marked deterioration in the trade balance, official data showed on Friday, taking some of the shine off recent strong economic data.

Output in the industrial sector – which makes up about one sixth of Britain’s economy – had been expected to edge up by 0.1 percent according to a Reuters poll.

The narrower category of manufacturing rose by 0.2 percent, just short of forecasts for a 0.3 percent rise, although June’s figure was revised up, the Office for National Statistics said.

Signs of a surprisingly strong recovery in Britain’s economy have come thick and fast in the past few months. Growth of 0.7 percent in the second quarter could be trumped by an even stronger reading in the third.

The Bank of England pledged last month to keep interest rates on hold until unemployment falls to 7 percent, something it does not envisage happening for another three years, but the strength of recent data has encouraged traders to bet rates might rise as soon as next year.

Separate figures showed Britain’s goods trade deficit widened to 9.85 billion pounds in July after narrowing sharply in June. Economists had forecast a gap of 8.153 billion pounds.

Including services, in which Britain traditionally runs a surplus, the trade deficit widened to 3.085 billion pounds. That was more than double its level in June and the worst reading since October 2012.

Exports to non-European Union countries plunged by nearly 16 percent, the biggest monthly fall since January 2009.

Monthly trade figures are volatile but July’s figures may dampen hopes that Britain’s economic recovery is broadening and moving onto a more sustainable footing.

(Reporting by Christina Fincher and William Schomberg)

The Budget: George IV

Yesterday’s Budget had all the marketing qualities of a statement which is already anticipating the next General Election.

A few give-aways, something for the housebuyer, a little bit for the businessman and of course, a catch phrase!. In fact , the Chancellor provided three:

The Saatchiesque “Aspiration Nation” , another “nod” to Margaret Thatcher in the shape of the “Help to Buy” and  of course, “Britain is open for business!”

This was the Budget of a Chancellor who either does not fully appreciate the scale of the United Kingdom’s economic decline or who is trapped but feels that he ought to show willing and fiddle at the peripheries.

Bitter past experience has shown that direct Government interference  in the housing/mortgage market always ends in tears. On the face of it, it now looks as if the government may be encouraging house purchase by those who may not be able to afford it. That is what cause the 2008 banking meltdown. Luckily for the Chancellor, there is unlikely to be a big take-up of the “interest-free up to 20%” additional loans which the government is offering. Depending on how the £130 billion in “loan guarantees” is dispensed, it may just be more Quantitative Easing in disguise. Previous form suggests that once cash is handed to the banks by government, the difficulties arise when attempts are made to prise the money from their cold grasping hands. We’ll see!

Let us hope that on this occasion, some of the cash does end up in the hands of the house buyer rather than in Stocks or Commodity speculation by the banks.

The Chancellor’s “Rabbit out of the Hat” 20% Corporation Tax Rate already applies to businesses earning up to £300,000 with a marginal rate being paid by those earning up to £1,500,000. So, for several years, this will mean very little. Yesterday’s CT announcements were for big business only.

The Chancellor’s headline-writers  may have had a good day but in reality, commerce has NOT received the shot in the arm which it needs TODAY.

Finally, here’s a bit of lateral thinking: How about the government having the courage to make a massive investment in agriculture. The returns would be in the Exchequer’s coffers far sooner that having to wait for those “forced entrepreneurs” to contribute.

p.s.  Gideon……sack your voice coach.