UK Economy Shows Signs of Recovery Despite Lingering Challenges

Data released in September could indicate if UK is moving past recent economic crises
Unemployment may rise and GDP may shrink in July, but earnings growth may exceed inflation
Fuel prices likely to cause inflation blip in August, affecting Bank of England rate decision
Higher wages and borrowing costs adding pressure on government forecasts and budget headroom
Falling inflation, steady growth expected, but interest rate hikes still hurting households

bbc.co.uk

Relevant topic timeline:

8/23/2023

Recession fears grow and interest rate expectations decline after surprise slump in output

Recession fears return as a key business survey shows a significant contraction in the UK economy, signaling the detrimental effects of interest rate rises on businesses and heightening the risk of a renewed economic downturn.

8/26/2023

The Electoral Battle for 2024 Merits a Deeper Reflection on the State of India’s Economy

India's economy is facing challenges as GDP growth declines, investment demand weakens, inflation rises, and job creation remains a major concern, highlighting the need for a comprehensive economic plan to address these issues.

8/27/2023

Britain has a rare chance to break its cycle of decline

Britain's experience with quantitative easing (QE) and monetary policy has had both positive and negative impacts, with the unnecessary prolonged period of cheap money causing damage, the kamikaze printing of money during the pandemic feeding inflation and leaving taxpayers with a large bill, but also some good news as inflation is expected to decelerate and boost spending power as real incomes rise, although second-round effects could ensure inflation's persistence. The UK economy is weak and policy should focus on averting recession and challenging consensus-thinking on future growth, as the country's composite Purchasing Managers Index (PMI) has fallen to a 31-month low, with the services sector slipping into recession and a slump in retail sales in August. Higher interest rates are causing corporate distress, suggesting the need to stop raising rates, while elevated policy rates and selling of gilts by the Bank of England will keep upward pressure on long-term yields and borrowing and mortgage rates. The expectation of positive real interest rates signals the end of cheap money and offers an opportunity in Britain to rethink fiscal and supply-side policy, encouraging investment, innovation, competitiveness, and improved skills. Overall, the outlook is characterized by falling inflation, weak growth, and the opportunity to reset monetary policy and focus on fiscal policy, the supply side, and investment.

9/25/2023

Key Economic Data, Earnings Reports in Focus as Investors Assess Outlook

Investors are focusing on the release of economic reports on GDP and inflation as they evaluate the Federal Reserve's stance on interest rates and its efforts to cool down inflation. Metal prices have slipped due to concerns over global demand and the economy, and the risk of a government shutdown is also adding to the bearish sentiment. Earnings reports from various companies and core PCE inflation data are expected in the week ahead.

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Posted 9/9/2023, 11:40:27 PM