June, 09 2017 by lsr team

Christopher Granville comments on UK election results:
- Minority Conservative government potentially bullish for economy
- Short-term Brexit process risks stem from political weakness
- Growth – now right on potential – to slow to 1%, recession risk is low

September, 30 2016 by lsr team

Events such as Brexit throw a spanner in the works of economic models and analysts are left with a wide range of plausible inputs. At the worst extreme, fear of Brexit becomes self-fulling and weighs on spending decisions, in turn crimping consumers’ style. Over-gloomy estimates prompt businesses to delay expansion plans. Firms make their capital spending projections based on these forecasts and they have not been in short supply. Undoubtedly, capex plans will be adversely affected by the uncertainty hanging over them. While a wide range of business sentiment indicato...

July, 07 2016 by lsr team

Last quarter we warned that, although growth was likely to remain positive during our 2-year forecast horizon, the end of the cycle was now in sight. Since then the Brexit vote has dragged forward the debilitating effect of final demand uncertainty on investment that we would normally associate with the very late cycle. As a result we expect a technical recession during H2 2016. To find out more about Brexit’s impact on the UK economy, click above the watch the video or below for our latest UK Outlook report.  

November, 09 2015 by lsr team

The Bank of England’s Mark Carney, who has been a accused of flip flopping over the past few years, turned dovish again on ‘Super Thursday’ as he unveiled new macroeconomic projections that served to push back market rate expectations. Given the downside risks to global growth and with the ECB on the verge of expanding its stimulus, the MPC clearly felt that a little dovishness couldn’t do any harm. As a result, most investors don’t expect interest rate ‘liftoff’ until late 2016, with increasing speculation the first rate hike might...

October, 20 2015 by lsr team

Concerns over a slowing China and its knock-on effects on other emerging markets (EMs) have triggered stock market turmoil in advanced economies over the past two months. Investors have started to question whether developed economies, including the UK, can shrug off EM weakness. Meanwhile, expectations of the first Bank of England interest rate hike have now been pushed back to December 2016. What are the impacts of a slowing China on the UK? Will the slowdown in EM growth led by China hinder UK’s domestic-led recovery?  Click below to find out.  

September, 01 2015 by lsr team

The yuan’s relatively small depreciation cannot explain its huge impact on investors’ attitudes. Rather, it served as a reminder of the persistent, powerful global deflationary trend. In the UK context, sterling strength has amplified global deflationary pressure on UK economy. Our analysis suggests that currency strength alone will have been sufficient to push annual CPI inflation around 0.5% lower today than it otherwise would have been. Along with large falls in energy prices, global deflation has done more than enough to contain any pick-up in inflation t...

July, 14 2015 by lsr team

 ‘Britain deserves a pay rise and Britain is getting a pay rise’, George Osborne announced during his Budget speech on Wednesday. A key aspect of our outlook, which we discussed before the UK general election, was that wages would grow faster than assumed in March 2015 and so the cyclical improvement in the deficit was likely to be stronger. The OBR has now made this adjustment by upgrading its wage inflation forecast. With forecast changes augmenting tax-raising measures to the tune of around £4bn per year, the government chose to slow the pace...

June, 17 2015 by lsr team

Following the surprise result of the UK general election, sterling markets are still faced with the prospect of political uncertainty.  An in/out EU referendum has to be held before the end of 2017, and most likely will be in late-2016.  The prospect of another fiscal rule intended to lock-in budget surpluses could have the effect of introducing a politically-motivated volatility. In the meantime, the UK economy is shaping up to enjoy a period of stable, non-debt dependent growth led by the consumer sector.  LSR’s Richard Batley introduced the sem...