UK business output UK recovery Covid lockdowns FTSE 100 UK GDP Almost half UK economy Sterling Furlough redundancy UK economy UK economic growth
Marketing No Comments

UK economic growth slows to weakest level since Covid rules eased in March

Severe shortages of workers and supplies have dragged down economic growth in Britain to the weakest levels since pandemic restrictions were eased in March, according to a closely watched business survey.

The latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) showed that growth in private sector output slowed in August as firms battled with severe shortages while costs rose at the fastest pace since the late 1990s.

Business activity faltered in the dominant service sector, which accounts for 80% of the economy, while the slowdown was more pronounced in manufacturing where severe supply-chain disruption held back growth in factory output.

In a sign that the economic recovery from lockdown is waning, business expectations for the year ahead fell to their lowest since January and new orders eased to a seven-month low.

To find out more about how we can assist you with your Second Charge Mortgage please click here

The IHS Markit/Cips flash purchasing managers’ index dropped from to 54.1 in September from 54.8 in August, on a scale where anything above 50 indicates expansion. City economists had forecast a reading of 54.5.

Chris Williamson, the chief business economist at IHS Markit, said the barometer of business activity would add to concerns that the UK economy was heading for a bout of stagflation, a period of weak economic growth accompanied by rapid growth in consumer prices.

The survey of about 1,200 service-sector firms and manufacturers, which is closely watched by the Bank of England and the Treasury for early warning signs from the economy, showed a sharp acceleration in companies’ costs. Against a backdrop of rising transport costs, product shortages and higher staff wages, firms raised their prices at the fastest pace since the survey began in July 1996.

“Shortages are meanwhile driving up prices at unprecedented rates as firms pass on higher supplier charges and increases in staff pay. Brexit was often cited as having exacerbated global pandemic-related supply and labour market constraints, as well as often being blamed on lost export sales,” Williamson said.

By Richard Partington

Source: The Guardian

Discover our Second Charge Mortgage Broker services.

UK service sector Britain’s economic output UK economy Second charge mortgage UK economy UK economic growth
Marketing No Comments

UK economic growth to smash official forecasts this year

The UK economy will grow faster than official forecasters expect this year and the rate of expansion will be higher in the long term, according to a new report released today.

Ratings agency Fitch says the British economy will grow 6.6 per cent this year, higher than the Office for Budget Responsibility’s four per cent forecast.

The successful vaccination programme in the UK enabled policymakers to lift economic restrictions quicker than other rich nations, providing a boost to the economy throughout the second quarter.

To find out more about how we can assist you with your Second Charge Mortgage please click here

The relatively earlier reopening of the UK economy has dampened British consumers’ concerns about catching Covid and driven spending to similar patterns seen before the pandemic, Fitch said.

The link between rising Covid cases and weaker economic activity has been severed as consumers have acclimated to living with the virus.

The OBR does think the UK economy will grow faster in 2022. However, its 1.7 per cent growth forecast for 2023 is significantly lower than Fitch’s prediction of a 2.2 per cent expansion in output.

The UK economy is anticipated to grow faster than both the US (6.2 per cent) and Eurozone (5.2 per cent) this year.

According to the Office for National Statistics, the UK economy grew just 0.1 per cent in July.

Fitch upped its inflation forecast for the UK, hiking to reach 3.4 per cent annually by the end of this year and four per cent in early 2022. Despite both these figures being above the Bank of England’s target, the ratings agency does not expect the Old Lady to hike rates until 2023.

According to the ONS, consumer price inflation and input inflation currently sit at 3.2 per cent and 11 per cent on an annual basis.

Ongoing worker shortages and sustained supply chain snarl ups could derail the economic recovery, Fitch noted.

By Jack Barnett

Source: City AM

Discover our Second Charge Mortgage Broker services.

UK service sector Britain’s economic output UK economy Second charge mortgage UK economy UK economic growth
Marketing No Comments

UK economy growing at the fastest pace in eighty years – EY

Big Four accountancy firm, EY, has upgraded the country’s economic growth prospects, predicting the fastest rate of growth in 80 years as the UK emerges from the coronavirus pandemic.

The EY ITEM Club’s Summer Forecast predicts the UK economy to grow 7.6% this year, the fastest rate of economic growth since 1941, upgrading its forecast by 0.8 percentage points from Spring figures.

The UK economy is expected to now return to pre-pandemic level by the end of the year, three years earlier than appeared likely in forecasts made this time last year. Growth of 6.5% is now expected in 2022, an improvement from the 5% growth forecast in April. This will be followed by growth of 2.1% in 2023 and 1.6% in 2024.

The return to growth, according to EY, is being driven by consumer spending as the economy reopens, with confidence boosted by the UK’s rapid rollout of the Covid-19 vaccine. Delays to the government’s reopening of the economy were not judged to have impacted recovery, however.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Compared to other economies, the UK is much more dependent on consumer spending on services, such as recreation and leisure activities, which meant that lockdowns had a greater economic impact here than elsewhere. Reopening these face-to-face parts of the economy means the UK should have a correspondingly faster recovery.

“Vaccines have played a key role in bringing forward the reopening of the economy and have been a key factor in the upgrades of the forecast throughout this year. We are also seeing some structural effects too: the UK’s way of measuring public sector spending means this will soon switch from being a drag on output to a positive, while the restrictions on international travel mean there should be much less of a tourism deficit than usual.

Martin Beck, the senior economic advisor to the EY ITEM Club

“While elements of the forecast remain uncertain, the UK has all the ingredients for a strong economic recovery from the pandemic. There is the possibility of a virtuous circle of positive expectations among businesses about rising consumer confidence and spending which, in turn, could boost firms’ confidence and output further. The fuel to sustain this circle – in the form of strong household and corporate balance sheets, and supportive fiscal and monetary policies – is there too.

“After almost 18 months of significant disruption, businesses have some space to plan ahead and invest in confidence. This could help businesses catch-up on the growth they’ve missed out on if they take the right steps to adjust to a return to a more familiar business environment.”

Stephen Church, EY’s North Markets Leader

The accountancy firm is also optimistic for employment figures, with unemployment predicted to peak at 5.1% in the second half of this year, according to EY’s analysis, and then beginning to fall in 2022. While above pre-pandemic levels, the rise in unemployment has been well below predictions made in 2020 at the height of the pandemic. The firm’s forecast attributes the furlough scheme and the way businesses have adapted to new trading conditions to the better than expected picture for jobs.

While EY’s forecast is optimistic for rapid growth as the consumer economy reopens in the UK, uncertainty remains over inflation and to what extent the British public will draw on savings built up during lockdown. Inflation is forecast to reach 3.5% by the end of 2021.

Martin Beck added:

While consumers have accumulated their largest stockpile of savings since the Second World War, the big question is whether they will actually start to spend these funds once restrictions on activity are lifted. The assumption is that they will, but this is not guaranteed. The picture for consumers is not entirely positive: savings are concentrated among higher-income households, while higher unemployment and inflation will weigh on real income growth. Household incomes are expected to rise 1% in real terms this year, which is well short of forecast GDP growth.

“The risks posed to the forecast by inflation can’t be overlooked either, particularly if prolonged higher-than-target inflation prompts the Bank of England to tighten monetary policy. However, while the departure of overseas workers from the UK during the pandemic might lead to some inflationary bottlenecks, there are factors, such as a stronger pound, which will help keep a lid on prices. Positively, the ingredients which were often a precursor to sustained higher inflation in the past do seem to be missing.”

Source: Marketing Stockport

Discover our Second Charge Mortgage Broker services.

UK GDP Sterling BoE UK economy UK economic growth Pound Sterling
Marketing No Comments

UK economy tipped to bounce back strongly after the pandemic

Economic growth is on course to return to pre-Covid levels by the end of the year, a leading business group is predicting.

But the CBI warned of a “two-speed recovery”, with sectors having different levels of recovery.

Its research among almost 600 firms suggested that in the three months to June, private sector activity grew at the fastest pace for six years.

Manufacturing and distribution activity grew at record rates while growth in business and professional services remained strong, but consumer services activity continued to fall, said the CBI.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Alpesh Paleja, CBI lead economist, said: “With much of the economy having now reopened, we’re seeing a boost in activity across the economy.

“With robust expectations for the months ahead, and real positivity in terms of vaccine uptake, CBI forecasts show that UK GDP is on course to return to pre-Covid levels by the end of the year.

“Where we need to remain vigilant is the emergence of a two-speed recovery.”

The CBI added that sectors such as manufacturing, distribution and business and professional services looked well on the road to recovery, while firms in industries such as travel needed greater support to prevent the loss of skilled jobs.

By Daniel Smith

Source: Essex Live

Discover our Second Charge Mortgage Broker services.

UK GDP Sterling BoE UK economy UK economic growth Pound Sterling
Marketing No Comments

UK economic growth is picking up pace as restrictions ease

HOPES have been raised that UK economic growth is picking up pace in the second quarter after a key survey signalled a big leap in private sector activity in May, driven by a resurgence in manufacturing and the reopening of retail and hospitality.

The seasonally adjusted, flash composite purchasing managers index (PMI) for the services and manufacturing sectors reached a series high of 62.0 in May, up from 60.7 in April. The index gave readings of 56.4 in March and 49.6 in February. IHS Markit and CIPS (Chartered Institute of Procurement & Supply), which compile the data, said the rate of expansion was the fastest since the composite index began in January 1998, and was underpinned by strong contributions from manufacturing and services.

The expansion came amid steep increases in output, new orders and employment in the manufacturing sector, and rising demand for hotels, restaurants and other consumer-facing services as hospitality, tourism and non-essential retail reopened.

The flash manufacturing PMI reading surged to 66.1 in May, the highest since this survey began in January 1992, from 60.9 in April, while the reading for services rose to 61.8 from 61. Any reading above 50 signifies expansion.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Chris Williamson, chief business economist at HIS Markit, said: “The UK is enjoying an unprecedented growth spurt as the economy reopens. Factory orders are surging at a record pace as global demand for goods continues to revive, and the service sector is reporting near-record growth as the opening up of the economy allows more businesses to trade. Business confidence has meanwhile hit an all-time high as concerns about the impact of the pandemic continue to fade.”

Howard Archer, chief economic adviser to the EY ITEM Club, noted that the index had shown employment had risen for the third month in a row after a year of contracting, and at the “fastest rate since June 2014”.

But he observed: “Not so good news saw input prices rise at the fastest rate for nearly 13 years.”

The report noted that pressure on prices came from a “shortages of raw materials and high shipping costs, while service providers often noted increased staff salaries.”

Kieran Tompkins, assistant economist of Capital Economics, said the latest reading from the closely watched IHS Markit/CIPS index – the highest in more than 20 years – “points to the economic recovery shifting through the gears and picking up speed.”

By Scott Wright

Source: Herald Scotland

Discover our Second Charge Mortgage Broker services.

UK business output UK recovery Covid lockdowns FTSE 100 UK GDP Almost half UK economy Sterling Furlough redundancy UK economy UK economic growth
Marketing No Comments

UK economy back to growth ahead of predicted spending spree

The UK economy grew by 0.4% in February, new data from the Office for National Statistics (ONS) has revealed.

The return to growth followed a sharp drop of 2.2% in January recorded by the ONS, though it’s notable that it was still down by 7.8% from February 2020.

The ONS found that the service sector grew by 0.2% over the month, pointing to a “little” pick up in wholesale and retail trade sales, though this was far lower than the jump of 1.6% seen in the construction sector. This was driven by growth in both new work projects and repair and maintenance.

Meanwhile, output in the production sector increased by 1%, while manufacturing grew by 1.3% over the month.

Learning lessons
Howard Archer, chief economic advisor to the EY Item Club, argued that the figures show the economy is being affected less by lockdown measures than was originally the case, which suggested lessons had been learned and experience gained in how to keep activity going.

He added: “Companies and employees have got used to home working and, significantly, many workplaces, offices, sites and plants have been adjusted to meet Covid-19 social distancing requirements so that employees can continue to work on site.”

Archer said that with confidence on the rise, EY Item Club was revising its GDP forecast for 2021 to a much higher 5%, continuing: “The UK economy is expected to benefit progressively from the second quarter as restrictions on activity are eased, supported by the rapid roll-out of Covid-19 vaccines.”

To find out more about how we can assist you with your Second Charge Mortgage please click here

Time for a spending spree
Danni Hewson, financial analyst at AJ Bell, said that whole there was still lots of ground to make up, the images of packed pub gardens and lengthy queues on the nation’s highstreets suggested that many people were set to put restrictions behind them and embark on a spending spree.

She added: “There is also small comfort to be had in February’s trade figures. Exports to the EU which dropped so dramatically off a cliff in January have bungeed back up, though they are still £2bn down on pre-Brexit levels. Notably imports from the EU were less resilient and remain more than £5bn down. It’s clear there are still issues but many of those will have been exacerbated by lockdown restrictions, something which will undoubtedly continue further into the spring.”

Robert Alster, CIO at Close Brothers Asset Management, agreed that growth will be driven by spending and corporate investment, but argued the true state of the jobs market remains a big unknown.

He continued: “The furlough scheme will phase out from July to September, and it’s unclear whether businesses will re-hire all their workers. In a worst case scenario, a sustained rise in unemployment could undermine a strong UK recovery.”

Written by: John Fitzsimons

Source: Your Money

Discover our Second Charge Mortgage Broker services.

Bank of England coronavirus Pound Sterling UK economy UK economic recovery UK Government borrowing UK economic recovery UK economy
Marketing No Comments

UK economy at risk of double-dip after bouncing back strongly over the summer

UK economy bounced back strongly over the summer but fears are mounting that the recovery is running out of steam.

Retail sales climbed by another 1.5 per cent in September – taking gains in the third quarter of the year to a record 17.4 per cent.

Sales are now 5.5 per cent higher than they were in February before the full force of the pandemic struck, according to the Office for National Statistics report.

With household spending seemingly powering the recovery following the lockdown, the Ernst & Young Item Club estimated that the economy grew 16 per cent in the third quarter.

That follows a record contraction of almost 20 per cent in the second quarter. But it is feared that the recovery is faltering as fresh restrictions to prevent a second wave of the virus take their toll.

A separate report by IHS Markit showed the economy has lost momentum. Its purchasing managers’ index (PMI) – a key gauge of the private sector where scores above 50 show growth – fell from 56.5 in September to a four-month low of 52.9 this month.

‘The pace of UK economic growth slowed in October to the weakest since the recovery from the national Covid-19 lockdown began,’ said IHS Markit economist Chris Williamson.

‘Not surprisingly, the weakening is most pronounced in the hospitality and transport sectors, as firms reported falling demand due to renewed lockdown measures and customers being deterred by worries over rising case numbers.’

Warning that the fourth quarter of the year has started on ‘a weakened footing’, he added: ‘The risk of a renewed downturn has risen.’

Paul Dales, chief UK economist at Capital Economics, said Britain was at risk of a double-dip recession.

To find out more about how we can assist you with your Second Charge Mortgage please click here

He said the slowdown this month ‘comes before the full force of the latest Covid-19 restrictions are felt and supports our view that GDP will stagnate in the final three months of the year, if not contract again.’

He added: ‘The PMIs suggest you shouldn’t read too much into the decent rise in retail sales in September.

‘Instead, the renewed downward trend in the PMIs provides a better sense of what’s happening to the overall economy. And it’s not looking good.’

The UK economy contracted by 2.5 per cent in the first quarter of the year and by a record 19.8 per cent in the second quarter as the closure of businesses wreaked havoc.

While the economy bounced back over the summer, it is feared that strict restrictions will derail the recovery.

Sam Miley, an economist at the Centre for Economics and Business Research, said: ‘Some fragility is likely to arise in the coming months.

‘This stems from the increasingly widespread reimplementation of restriction measures across the country, with this set to impact consumer behaviour.’

By HUGO DUNCAN FOR THE DAILY MAIL

Source: This is Money

Discover our Mortgage Broker services.