UK economy

Kitty Ussher is an economist and former government minister. Her dayjob is managing director of Tooley Street Research.

Each week, or thereabouts, I pick out the key bit of new data that, in my opinion, is most useful to understand what is going on in the UK economy. Taken together, these provide a developing story about how the economy is performing and, possibly more interestingly, how we think it is performing at the time.

November 24th 2016: Debt now expected to rise to 90% of GDP
I’ve been keeping a record of UK public debt forecasts since the OBR was established in 2010. Here’s a chart that brings it all together and shows that whereas in 2010 debt was expected to peak at 70% of GDP in 2013-14, now its expected to peak at a massive 90% of GDP in 2017-18.

November 18th 2016: Consumers are feeling confident
There wasn’t much in this week’s ONS retail sales data to suggest that consumers were feeling worried. The upward path of sales volumes continues, as this week’s chart shows. Going into a little more detail however, it can be seen that although prices continue to fall in stores and online retailing, the pace of the fall is slowing. Petrol prices, meanwhile are rising. But compared to other movements in the last few years, these changes are very slight.

November 11th 2016: Trade data doesn’t (yet) show a Brexit effect
This week the ONS monthly trade figures for September 2016 came out, providing the first quarter’s data since the Brexit vote. There was no discernible difference from the previous trends, leading the ONS to say there was “little evidence in the data of the lower pound feeding through into trade volume or prices”

November 4th 2016: Bank of England believes we’ll avoid recession
Just posting here to mark the fact that the November 2016 inflation report predicts that GDP growth will slow in 2016 but that the UK will avoid a recession. For the record, however, their prediction of much lower consumer confidence that I picked out back in August has also now been revised upwards.

October 25th 2016: What’s going on with clothing sales?
ONS data on retail sales for September 2016 shows that clothing sales fell as prices rose. Is this the beginning of sterling’s devaluation raising the prices of imported goods leading to falling confidence amongst consumers? Or is it simply because the second-warmest September on record meant people delayed buying winter coats….

October 14th 2016: Investing in property for retirement seen as more lucrative than a pension
And you wonder why house prices are rising….an early data release from the ONS wealth and assets survey suggests that people think they’ll make more money for their retirement by investing in property than their pensions

October 7th 2016: A lot is at stake on services exports to the EU
Just in case you were wondering what all the fuss about the banks locating in London to access the single market is about, this month’s trade data by the ONS included a handy chart that shows the size of our trade surplus in services to EU countries.

September 30th 2016: Retail trade figures from the CBI a bit low
The CBI publishes monthly figures on retail trade volumes, based on their own survey. The data for September came out this week, showing a big fall in the number of companies that expected volumes to rise. Might be temporary – but worth keeping an eye on.

September 23rd 2016: Will the government’s pile of debt keep rising because of Brexit?
The massive big pile of UK government debt (which is measured as a proportion of the size of the economy) was supposed to finally start to fall for the first time since the financial crisis this year. Data for the first five months of the year – from April to August was released by the ONS this week. As shown on this slide, it looks as if things are on track. However, if the economy doesn’t grow as fast as expected in the remainder of the fiscal year, it might not look so good.

September 16th 2016: Those women, coming and taking our jobs
This chart, released as part of September’s labour market bulletin, shows the long-run trend in male and female employment rates. As can be seen there has been a noticeable convergence in the last 40 years, but still a significant gap.

September 9th 2016: A fall in sterling doesn’t necessarily boost exports.
The Office of National Statistics has today published its latest trade data, including a commentary that shows despite conventional wisdom, a fall in sterling doesn’t necessarily make exports cheaper relative to imports. Here’s the slideshowing how import and export prices are correlated.

September 1st 2016: Consumer confidence improves
The shock to consumer confidence that was recorded immediately after the EU referendum is alleviating. This chart shows how consumers felt better about the future, and their personal finances, in August than they did in July, although the aggregate consumer confidence index constructed by GfK is still in negative territory.

August 22nd 2016: A run of positive data surprises economists
This chart, courtesy of the FT and Citi, shows the difference between actual economic data and what is expected. The upwards spike shows that in the last few weeks, economists have been too pessimistic about the state of the UK economy. Data from July and the first half of August hasn’t been as bad as some people thought it would be – perhaps confidence will pick up and a recession avoided.

August 5th 2016: BoE says households will save more
The Bank of England August 2016 Inflation Report shows how it expects household saving ratios to be higher now, due to Brexit, than it thought back in May. This is the key indicator that is linked to consumer confidence and so has a direct effect on the level of demand in the economy. Here’s the chart. Will they be proved right?

July 22nd 2016: Clearest sign of falling GDP in Q3
As the graph here shows, there has historically been a strong correlation between the IHS Markit Purchasing Managers’ Index and UK quarterly GDP growth, but of course the PMI index comes out several months earlier than the GDP figures. July’s data suggests the economy is contracting – but will it persist?