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Economic Review – September 2019

Posted on 14 October, 2019

RECESSION FEARS EASE

The latest gross domestic product (GDP) statistics showed the economy grew more strongly than expected in July, significantly easing fears that the UK was on the verge of slipping into recession.
Over the past month or so, a plethora of negative business surveys had raised serious concerns about the state of the UK economy. And, after shrinking in the second quarter of the year, a further contraction in the current quarter would result in a second successive quarter of contraction – the technical definition of a recession.

Data released by the Office for National Statistics (ONS), however, has eased those fears with the UK economy growing by 0.3% in July. This was a distinct improvement on the previous month, when the economy failed to grow at all, and significantly stronger than the 0.1% increase economists had widely been predicting…….

INFLATION DROPS TO TWO-YEAR LOW

Weak computer game and clothing prices resulted in the headline rate of inflation slowing sharply in August, a move which appears to reduce any pressure on the BoE to tighten monetary policy in the short-term. Data from ONS showed that the Consumer Prices Index (CPI) 12-month rate – which compares prices in the current month with the same period a year earlier – dropped to 1.7% in August. This was down from 2.1% in the previous month and marks the slowest recorded growth in prices since December 2016…..

BREXIT ENDGAME?

The past month has again seen numerous political twists and turns in the Brexit process and as we enter the final month before the second deadline, it remains decidedly unclear how Brexit will ultimately play out. During the past month, the government increased efforts to negotiate a new deal with several meetings held between Brexit negotiators and EU officials. However, the EU consistently insisted that no new firm proposals had been put forward and the two sides appear to remain some distance apart on several key issues…….

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