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

Sunak says UK economy to grow more slowly in 2022, inflation to jump

UK economy will grow more slowly this year than previously predicted and inflation will be much higher, finance minister Rishi Sunak said as he gave a budget update which included measures to ease a cost-of-living squeeze.

Sunak, announcing forecasts drawn up by the Office for Budget Responsibility (OBR), said on Wednesday the economy was likely to grow by 3.8% in 2022, a sharp slowdown from a forecast of 6.0% made in October.

Inflation, as measured by the consumer price index, is now seen at 7.4% in 2022, compared with October’s forecast of 4.0%.

Sunak is under pressure to offer more help to Britons who are facing their worst cost-of-living squeeze in at least 30 years and he announced a cut to fuel duty of 5 pence per litre starting later on Wednesday and lasting until March next year.

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

Earlier, data showed Britain’s consumer price inflation hit a 30-year high of 6.2% last month, driven by soaring costs for energy and food, which poorer households especially may find hard to cut back on.

The International Monetary Fund estimates British gross domestic product will grow by 4.7% in 2022, the fastest among Group of Seven nations. The UK economy suffered a COVID-19 slump of more than 9% in 2020 and grew by over 7% in 2021.

The OBR forecast that gross domestic product would grow by 1.8%, 2.1% and 1.8% in 2023, 2024 and 2025, Sunak said.

In October, the OBR had forecast growth of 2.1%, 1.3% and 1.6% over the next three years.

Writing by William Schomberg

Source: ZAWYA

Discover our Second Charge Mortgage Broker services.

UK economy Bank UK inflation
Marketing No Comments

Soaring inflation is biggest financial worry among UK adults

The biggest financial concern of UK adults, in both the short and longer term, is rising inflation, according to new research from M&G Wealth.

A quarter (25%) of people surveyed cited rising inflation as their greatest financial concern this year, while just more than one in five (22%) respondents said rising inflation was their biggest financial worry for the next five years.

M&G Wealth’s latest research which quizzed 2,000 UK adults who have personally, or who have parents or grandparents who received financial advice from an adviser in the last five years, looked at how individuals felt about their savings habits as the cost of living rises.

Unsurprisingly, the research found respondents were more focused on their short-term financial needs. Beyond rising inflation, worries included ‘my investments losing money’ (18%) and ‘not saving any money’ (17%).

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

The cost of living played heavily on the minds of respondents. More than a quarter (26%) surveyed said they were worried the cost of living will go up, and so preventing them saving as much as they would like to, while 18% said their bills were too high to allow them to save more.

Savings rates overall were less than desirable. Some 14% of adults save less than £50 per month, and nearly a fifth (18%) of those surveyed said they could not afford to save more.

Looking to respondents’ ‘rainy day fund’, the picture was a little brighter. Nearly a quarter (23%) of those surveyed said they had more than a year’s expenses set aside. However, a third (33%) of respondents had expenses to cover three months or less saved, and 8% of respondents had nothing saved at all.

Les Cameron, savings expert at M&G Wealth, said: “While consumers have no control over rising inflation, currently at a 30-year high and predicted, by the Bank of England, to reach over 7% by the spring, there are steps they can take to take control of their finances.

“From energy bills to their weekly shop, families are starting to feel the pinch, and as a result are unable to save as much as they would like. Many are taking practical steps such as shopping around for cheaper prices to bring down the cost of basics like bread and milk, and setting out and sticking to a budget will help families feel more in control of their spending in the short-term. Though it may feel difficult at the moment, investing any savings, no matter how little, will provide a long-term benefit and hopefully some peace of mind for the future.

“When it comes to savings consumers are understandably worried. Current savings rates are lower than inflation, meaning those with significant cash savings really need to consider whether to accept that inflation is eroding the value of their money, or take some investment risk to try to maintain or grow the real value of their money. Investing is not, however, a decision to be taken lightly and is an area where most people could benefit from receiving some form of financial advice or guidance before going ahead.”

BY REBECCA TOMES

Source: IFA Magazine

Discover our Second Charge Mortgage Broker services.

UK rates Bank of England UK Economy BoE governor UK inflation Interest rates BoE
Marketing No Comments

Bank of England poised to raise interest rates as high inflation takes toll

Interest rates are expected to increase this week for the third time in three months as the Bank of England tries to curb a rapid rise in the cost of living.

A hike to 0.75% from 0.5% is anticipated, which would return us to the level of March 2020 but comes against the backdrop of geopolitical volatility and the likelihood that inflation will exceed 7%.

Rising gas and electricity costs are the main factors pushing up prices across the economy.

Inflation, as measured by the consumer prices index (CPI), is expected to peak at 7.25% in April, and average close to 6% in 2022.

Despite inflationary pressures, demand for property remains strong.

The latest figures show that the number of new prospective buyers in the UK was 47% higher than the five-year average in the first week of March. The figure for the first nine weeks of the year was up by 54%.

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

Meanwhile, the number of offers accepted was up by 81% in the first week of March, having risen 50% over the first nine weeks of the year.

Much-needed housing supply is also showing signs of picking up, with the number of market valuation appraisals 11.3% higher in the first nine weeks of the year. Sales instructions are catching up but were down by 6.3% over the same period.

Why is the market so active despite the current economic and political backdrop?

Tom Bill, head of UK residential research at Knight Frank explained: “The first reason is easily overlooked – the end of the pandemic. The lifting of final restrictions and return to normality is spurring people to take decisions about how and where they live. Crucially, it means demand is more needs-driven and less susceptible to external events.

“In higher-value property markets, larger bonuses in sectors including financial services and law have also provided some insulation against the spiralling cost of living.”

But growth is not limited to a narrow group of professions, according to Savvas Savouri, chief economist at Toscafund.

He believes challenger banks will drive competition in the mortgage market and put downwards pressure on rates in the same way Aldi and Lidl did in the supermarket sector.

Savouri commented: “Households are sitting on £250bn of excess savings compared to the start of the pandemic. House price growth has also created an extra £1trn in housing equity over the last two years.”

He expects the Bank of England base rate to end the year at 1.25% or 1.5% as the current uncertainty leads to a slightly shallower upwards trajectory. However, he remains bullish in his outlook for the UK economy this year.

“For a recession, you need the labour market or the banking system to collapse and we are nowhere near either,” he added.

Knight Frank expect house price growth to return to single-digits as supply continues to pick up and rates normalise, but the estate agency says that it seems unlikely it will get anywhere close to zero.

By MARC DA SILVA

Source: Property Industry Eye

Discover our Second Charge Mortgage Broker services.

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

UK GDP recovered in January after Omicron hit

The British economy expanded in January by 0.8 percent, exceeding its pre-pandemic peak by the same amount, the Office for National Statistics announced Friday.

That’s also a jump from December, when output fell by 0.2 percent as the Omicron variant weighed on economic activity.

“All sectors grew in January, with some industries that were hit particularly hard in December now performing well, including wholesaling, retailing, restaurants and takeaways,” said Darren Morgan, head of economic statistics. Software engineering and video production “also had a good start to the year.”

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

Construction and manufacturing contributed to growth as well, he said.

However, analysts cautioned that the spurt of growth could be short-lived due to global factors. Capital Economics, a consultancy, said in a note that while February’s numbers are likely to be positive as well, “the cost of living crisis and the influence of the war in Ukraine probably means this is as good as it gets for the year.”

Chancellor Rishi Sunak also reacted with caution in a press release, warning that the war in Ukraine is affecting the outlook.

“Russia’s invasion of Ukraine is creating significant economic uncertainty and we will continue to monitor its impact on the U.K.,” he said. “But it is vital that we stand with the people of Ukraine to uphold our shared values of freedom and democracy and ensure Putin fails.”

BY MATEI ROSCA

Source: Politico

Discover our Second Charge Mortgage Broker services.

UK inflation Bank of England
Marketing No Comments

Inflation to accelerate far ahead of Bank of England’s target as rate hikes loom

Inflation in the UK will soar far above the Bank of England’s target this year as the Russia-Ukraine war drives energy prices to record highs.

Accelerating prices will hit “almost all businesses and consumers” this year and choke economic growth, Thomas Pugh, an economist at RSM, warned today, adding that the cost of living could climb as high as nine per cent.

Surging oil and gas prices sparked by the Russia-Ukraine war has led economists at RSM to predict the energy watchdog could hike the price cap a further 75 per cent in October.

Threadneedle Street will trade off shielding economic growth and in exchange for taming inflation by hiking rates at each of its next four meetings and send borrowing costs to 1.75 per cent by November, according to Bank of America.

Rates have not been that high since December 2008, underlining how concerned the Bank is about the cost of living pulling ahead of its two per cent target.

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

Communication gaffes over the last year have “undermined [the Bank’s] ability to use words to control expectations,” analysts at Bank of America said.

As a result, lifting rates will be the Bank’s main tool to curb price rise expectations.

Poor wage growth coupled with elevated inflation will erode real incomes at one of the steepest rates in peacetime, Bank of America said, adding that household consumption, which accounts for around 60 per cent of UK output, will stagnate for the next 12 months.

Both RSM and Bank of America slashed their forecasts for UK GDP growth this year.

Commodities are widely used by producers across the economy, meaning higher prices will leave them with the choice of either operating with lower profit margins or raising prices to offset higher costs.

The latter increases the risk of creating conditions in which a wage/price could occur, in which workers demand higher pay to maintain their living standards, leading firms to raise prices even further.

Inflation is already at a 30 year high, hitting 5.5 per cent in January.

By JACK BARNETT

Source: City AM

Discover our Second Charge Mortgage Broker services.

UK’s economic growth winter economy plan UK economy UK economic recovery
Marketing No Comments

UK’s economic growth to halve this year says British Chambers of Commerce

UK’s economic growth will halve this year as a result of soaring inflation, hefty tax rises and the destabilising shock from the war in Ukraine, a leading business lobby group has warned.

In the first major forecast of the UK economy since the Russian invasion of Ukraine, the British Chambers of Commerce (BCC) said it expected an inflation rate of 8% to cut disposable incomes in 2022, putting the brakes on the recovery from the pandemic.

In its previous forecast, the BCC expected GDP to expand by 4.2%, but after a wide ranging review it said growth would fall to 3.6% – less than half the 7.5% expansion in national income seen last year.

The BCC said the size of the economy would surpass its pre-pandemic level over the next few months, but was likely to struggle as consumer confidence, which collapsed last month as the full weight of the cost of living crisis became clear, dropped further over the coming months.

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

Suren Thiru, head of economics at the BCC, said he now expected inflation to peak at 8% and interest rates to increase to 1.5%, adding to the burden on households and companies, already battered by two years of Covid.

“Our latest forecast signals a significant deterioration in the UK’s economic outlook,” he said.

He described the effects of rising inflation, supply chain disruption and higher taxes as having a suffocating effect on the UK economy that would see growth “run out of steam in the coming months”.

“Russia’s invasion of Ukraine is likely to weigh on activity by exacerbating the current inflationary squeeze on consumers and businesses and increasing bottlenecks in global supply chains,” he said.

The downgrade largely reflects a deteriorating outlook for consumer spending and a weaker than expected rebound in business investment, he added.

Unlike in the US and most other European economies, Rishi Sunak’s attempts to boost investment using tax breaks and subsidies have failed. Last year business investment declined despite the offer of a 130% tax break on spending on new plant, machinery and technology.

Business investment is forecast to grow at 3.5% in 2022, the BCC said. “This is down from the previous forecast of 5.1% and materially lower than the Bank of England’s latest projection of 13.75%.”

The anaemic increases in business investment will mean it remains 6% lower than its pre-pandemic level by the end of 2024. UK exports are expected to remain 13.7% (or £25.5bn) lower than their pre-pandemic level by the end of 2024, reflecting “the impact of post-Brexit trade friction and a weakening global outlook on demand for UK goods and services”.

Consumer confidence fell last month to lows not seen since the third lockdown in January 2021, according to the latest GfK survey.

The BCC said consumer spending would grow in 2022, but at a much slower pace than it forecast last year. It estimated consumers would spend at 4.4% more than in 2021, down from its previous forecast of 6.9%.

Analysts at Bank of America said last week that UK households could suffer the biggest annual decline in their living standards since the 1950s after the sharp rise in energy prices.

With inflation already at the highest rate for 30 years, the analysts said a sustained rise for wholesale oil and gas markets due to the Russian invasion of Ukraine could trigger a drop in household real incomes of 3.1% in 2022 compared with a year earlier – the biggest annual drop since at least 1956, the year of the Suez crisis.

The BCC said it expected inflation to outpace wage growth until the second quarter of 2024, making the squeeze on household finances even worse than the most pessimistic predictions.

Some economists have argued that better off households, who have saved around £220bn during the pandemic, would use those savings to boost spending over the next year, but Thiru said the decline in consumer confidence would “limit households’ willingness to empty their deposit accounts.

By Phillip Inman

Source: The Guardian

Discover our Second Charge Mortgage Broker services.

UK economy Bank UK inflation
Marketing No Comments

BoE’s remit is to maintain inflation close to 2%

Part of the Bank of England’s remit is to maintain inflation close to a 2% target level, according to Tom Denman, chief financial officer at Principality Building Society.

Denman said: “It is already more than double this amount, and is predicted to go higher still.”

On Thursday, February 03, 2022, the Bank of England increased the base rate from 0.25% to 0.50%. This was the second increase in the base rate since December. One in five mortgages across the UK are trackers, which means due to the base rate rise, repayments will increase in line with the Bank of England’s decision.

The Consumer Price Index, a measure of the costs of goods and services, hit 5.4% in January, which is above the Bank of England target of 2%.

Denman added: “The MPC has raised rates because they fear that the inflationary pressures being witnessed in the wider economy are becoming entrenched.

“If they do not act to control it, there is the risk that wage inflation will follow as employees demand higher wages to compensate for these price rises.”

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

As a result, Denman said this would cause firms to have to increase prices further in order to pay for those increased wage demands.
In this way, he believes there is a risk that inflation could spiral, which is something central banks are historically afraid of.

The rate of inflation, already at its highest level for almost 30 years at 5.5%, is tipped by the bank to hit 7.25% in April when the energy price cap is lifted, with bills expected to rise by an average of almost £700 to account for unprecedented increases in wholesale gas costs.

The price cap is currently limiting the rates a supplier can charge for its default tariffs.

Denman outlined that the markets are pricing in a number of base rate increases throughout 2022, beginning with a 0.25% hike in base rate.
“This could take Bank Base Rate to around 1.0% by the end of the year, or even slightly above that level,” he added.

Ben Merritt, director of mortgages for Yorkshire Building Society, said that given the acceleration in inflation in the past year, combined with a hot jobs market, it is no surprise the Bank of England has moved to increase the Bank Rate, and indeed we have had two in quick succession.

“With the Bank of England predicting inflation will peak at over 7.00% in April and remain above the 2% target in 2022 and 2023, the Bank Rate is likely to increase further this year but most economists expect it will probably settle at 0.75% to 1.00%,” added Merritt.

Base rate increases normally result in mortgage rates rising and, while this may happen, Merritt believes intense competition in the mortgage market will mean the cost of borrowing may not rise in line with the bank rate and should still remain affordable.

Further to this, Andrew Bailey, governor of the Bank of England, has warned that large wage and price rises that reflect surging inflation risk embedding rising costs in the economy that will result in “slow activity and increased unemployment”.

He told the Treasury committee of MPs that the so-called second round effects of the energy-led rise in living costs were his “biggest concern” and, if realised, would hurt the least well-off the most and lead to even higher interest rates.

Looking to expectations, Denman said that given the MPC’s behaviour and rhetoric over recent years, he was expecting them to acknowledge the risk that raising rates too far or too fast could have a negative effect on economic growth.

He added: “We also expect them to be mindful of this as we exit the pandemic and go through 2022.”

Overall, Morgan Miles, head of product pricing at Principality Building Society, said: “It has been a tough few years for savers given the low rate environment, so we are happy to be able to increase the interest rates of our savings products.”

Miles went on to detail that Principality Building Society has tried to support savers as much as possible, maintaining an average interest rate on its accounts which has been consistently higher than the market average.

By Jake Carter

Source: Mortgage Introducer

Discover our Second Charge Mortgage Broker services.

UK inflation economy Omicron UK economic recovery UK Economy Bank of England
Marketing No Comments

UK Economy growth will be slow in 2022

London based Journalist and expert Sameh Habeeb said that UK economy will face a number of challenges due to international inflation, high prices of shipping and slowing economies around the world. Despite the end of COVID-19, restrictions the UK economy faces a tough start to 2022.

Meanwhile, Brexit impact can still be seen in the city and already affected SMEs and business in general.

Sameh Habeeb added, “While COVID-19 infections are down sharply, the Bank of England expects quarterly output to be back to pre-pandemic levels by the end of March. The rise in inflation, meanwhile, is expected to be faster than it has been in more than a decade, hitting a record high of 5.5% in January. The rise is also expected to hit a new high of 5.2 percent in April, as domestic power tariffs will be soaring. The Bank of England warns that despite the end of COVID-19, the United Kingdom economy will continue to experience a materially weaker 2022.”

“The reduction in overall trade with the EU is a worrying sign for the UK. Despite the end of COVID-19, British exporters are struggling to keep up with the global demand for manufactured goods and are losing market share.

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

Moreover, introducing fresh trade barriers is causing British businesses to struggle to remain competitive. Hence, the government is focusing on strengthening domestic production and reducing the reliance on imported goods.” Said Sameh Habeeb

Despite the end of COVID-19, the UK economy will still face a challenging start to 2022. The UK economy is already suffering from rising prices in December and January. In the final three months of 2018, the UK had the worst monthly GDP fall in the history of the European Union. Nevertheless, despite the end of COVID-19, the country will face a tough start to 2022.

Habeeb said, The annual rate of inflation will reach 7.2% in April. The Bank of England will then introduce a further hike to its main Bank Rate of 0.5% in October. Those changes will have a major impact on households’ finances in the first half of the year and beyond.

The EU’s COVID-19 rest period has made it easier to access vaccines. In Europe, the COVID-19 rest period was an exception. The end of the rest of COVID-19 in March 2020 will make the UK’s GDP growth rate slower than the EU average.

Sameh Habeeb said that the UK economy remain strong and one of the top 10 in the world and will achieve recovery sooner or later. He added that the Government must give me opportunities for SMEs and nee start ups. He also added that, the Government must ensure some good packages to push these companies which will help economy recover on local and national levels.

Source: Mid-Day

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 faces a difficult start to 2022 despite the end of COVID-19 restrictions

  • Despite the end of the COVID-19 restrictions from late January, the immediate outlook for the UK economy is uncertain
  • Intensifying price pressures and imminent tax hikes will erode real household incomes.
  • Persistent supply chain disruptions and acute labour shortages will continue to constrain output developments
  • The narrow EU-UK trade deal weighs down on UK exports to the reviving EU economy.

UK real GDP grew by 1.0% quarter on quarter (q/q) in the fourth quarter of 2021, compared with an identical rise in the previous quarter.

In annual terms, the economy rose by 6.5% year on year during the same quarter, which implied that the economy grew by 7.5% in 2021, the largest gain since the Second World War. However, this was after a 9.4% contraction in 2020, with the UK enduring a larger-than-average hit from COVID-19 and public health restrictions.

The UK outlook for 2022 is uniformly less upbeat, flagged by sliding growth projections.

Despite the end of most COVID-19 restrictions from late January 2022, we expect real GDP growth to slow in the first half of this year for the following reasons.

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

Many UK households face escalating cost of living pressures

The consumer price index (CPI) in the twelve months to January increased to 5.5% in January, the highest rate since the series began in January 1997, and since March 1992 (7.1%) when using the historical-modelled data.

More inflation pain lies ahead. Elevated energy futures prices forced the UK energy regulator Ofgem, which sets the tariff caps twice a year in April and October, to announce significant hikes. The tariff cap in April this year will increase by 54%, the largest increase since the government introduced the cap in 2019. This will imply notably higher household utility prices for 22 million households from 1 April.

The eye-watering rise in utility prices will ratchet up the anticipated peak in the 12-month rate in the CPI to over 7% in April 2022. Worryingly, Ofgem is expected to announce a further sharp increase in October, pointing to a higher-than-previously-anticipated inflation rate at the end of 2022. Meanwhile, households face more challenging fiscal and monetary policy conditions.

Employees face rising social security contributions from 1 April 2022 to finance the overhaul of the social care system and to allocate more resources to deal with the backlog of non-COVID-19 illnesses. The plan entails a 1.25-percentage-point rise in the National Insurance from April 2022. Meanwhile, the continued and broad-based climb in inflation prompted the Bank of England (BoE) to announce its first back-to-back interest rate hike in seventeen years in its February 2022 meeting. Furthermore, we expect further increases at both the March and May meetings, taking the Bank Rate to 1.0%. In addition, we acknowledge the increasing probability of an additional hike to 1.25% in November 2022.

Overall, we expect an intensifying squeeze on household confidence and real incomes. Early indicators are not encouraging, with real wages in retreat from late-2021. Furthermore, we now expect household disposable income adjusted for inflation to shrink in 2022, which would be the third time that it has fallen since 1990.

In addition, a greater share of savings accumulated during the lockdowns could be required to finance spending on essential goods as opposed to consumer durables and leisure and hospitality services.

Intensifying pressure on household budgets will weigh down on consumer spending developments and act as a handbrake on the pace of GDP growth in the next few quarters.

Supply constraints spill into 2022

The IHS Markit/CIPS UK Composite PMI survey reveals a continued shortfall of workers in January, preventing many companies from achieving full capacity.

Supply chain disruptions continue to elevate input cost inflation in January, with manufacturers and service providers having to lift aggressively their prices charged.

Firms cite rising salary payments alongside higher energy and logistics costs as significant obstacles.

Brexit strikes again

With the UK leaving the EU single market and Customs Union, UK exporters face additional checks for safety and security documentation, and customs papers, implying that the new EU-UK trading relationship does not deliver frictionless trade.

This is flagged by UK exporters failing to exploit the revival of domestic demand across the EU. According to Eurostat data, UK merchandise exports to the EU in nominal terms shrunk by 13.0% during 2021, compared with US and Chinese exports to the EU rising by 14.3% y/y and 22.6% y/y, respectively, over the same period.

The much-delayed full UK custom controls on EU imports are now enforced from 1 January 2022, adding to the supply chain disruptions because of tougher logistical cs industry warned that even if UK firms get their paperwork in order, they are dependent on hundreds of thousands of small- and medium-sized (SME) exporting businesses from across the EU.

Activity is likely to regain momentum temporarily from mid-2022.

Global supply chain constraints should ease alongside receding consumer price inflation and corporate cost pressures. In addition, uncertainties linked to COVID-19 developments should diminish.

Business investment plans are lifted by temporary tax breaks, which will end in April 2023.

By Raj Badiani

Source: IHS Markit

Discover our Second Charge Mortgage Broker services.

UK inflation economy Omicron UK economic recovery UK Economy Bank of England
Marketing No Comments

UK Economy Recovery Accelerates in February show PMIs, Locking in a March Rate Hike

The UK’s economic rebound accelerated faster than expected in February according to a leading survey, which noted “a swift rebound in UK economic conditions”.

The IHS Markit PMI survey for the UK showed both the manufacturing and services sectors expanded in February, with the Services PMI printing at 60.8, beating expectations for a reading of 55.5 and up on January’s 54.1.

The Manufacturing PMI read at 57.3, unchanged on January but up a touch on the consensus estimate of 57.2.

The Composite PMI – which rebalances the readings to give a more accurate snapshot of the broader economy – read at 60.2, ahead of consensus at 55.0 and January’s 54.2.

“The UK economy is rebounding from Omicron at a fair clip,” says Gabriella Dickens, Senior UK Economist at Pantheon Macroeconomics. “The forward-looking components of Markit’s survey suggest growth will remain brisk over the coming months.”

The rebound in UK economic activity was the fastest recorded in eight months and follows a slowdown caused by Omicron disruptions at the turn of the year.

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

A recovery in consumer spending on travel, leisure and entertainment were major contributors to the bounce back.

IHS Markit reports hiring was strong as staff recruitment accelerated again in February in response to increased workloads and favourable growth projections.

The rate of private sector employment growth was the fastest since October 2021, which was largely driven by stronger job creation in the service economy.

The findings come ahead of the March 17 Monetary Policy Committee meeting at the Bank of England, where it is expected another interest rate rise will be confirmed.

Indications that the economic rebound is solid will bolster the MPC’s decision to raise rates and signal further hikes are likely, which analysts say is a supportive dynamic for Pound Sterling’s outlook.

“The combination of reviving economic activity and widespread price increases suggests that the MPC almost certainly will raise Bank Rate to 0.75% at next month’s meeting,” says Dickens.

“The PMIs suggest the economy shrugged off the hit from Omicron. And the tentative signs of easing supply disruptions and price pressures are encouraging too. But with CPI inflation far above the Bank of England’s 2% target and rising, we still expect Bank Rate to reach 1.25% by the end of this year and 2.00% by the end of next year,” says Adam Hoyes, Assistant Economist, at Capital Economics.

But there remain some concerns for the outlook as inflationary pressures are acute and exports continue to struggle, with IHS Markit saying Brexit-related trade issues remain a factor.

IHS Markit’s Chief Business Economist Chris Williamson says UK goods exports slumped in February, contrasting with accelerating export growth in the eurozone.

“UK exporters are consequently underperforming their peers in the eurozone to one of the greatest extents seen over the past 15 years as Brexit adds to UK trading headwinds,” says Williamson.

Nevertheless, IHS Markit reports production volumes in the manufacturing sector were helped by fewer raw material shortages and easing global supply chain pressures, according to survey respondents.

Easing of supply chain constraints are expected to ultimately translate into easing cost-push inflationary pressures later in 2022.

The findings come on the day the Government is expected to detail how the country intends to ‘live with Covid’ and announce a complete removal of all Covid-related legislation.

Stronger client demand was widely linked to improving confidence about the UK economic outlook and roll back of pandemic restrictions said IHS Markit.

Year-ahead business expectations meanwhile picked up for the third month, with businesses the most optimistic since May 2021.

IHS Markit says positive sentiment towards the business outlook was linked to a strong recovery in client demand after the Omicron wave, as well as long-term expansion plans and hopes that the worst phase of supply disruption has passed.

“The latest UK purchasing manager indices will tick a lot of boxes for Bank of England policymakers,” says James Smith, Developed Markets Economist at ING Bank. “It’s yet another hint that Omicron has done very little lasting damage to the UK economy, and the data is consistent with what we’ve seen with just about every other high-frequency indicator.”

Written by Gary Howes

Source: PSL

Discover our Second Charge Mortgage Broker services.