Runes value of the UK economy before the decision of the Bank of England

  • Runes value of the UK economy before the decision of the Bank of England
    Independent.t. E.
    The Bank of England is prepared to raise interest rates in the new post-crisis high, indicates the health of the UK economy is ambiguous.
    https://www.independent.ie/business/world/reading-the-runes-of-the-uk-economy-ahead-of-boe-decision-37176099.html
    https://www.independent.ie/business/article37176098.ece/829db/AUTOCROP/h342/2018-08-02_bus_42957046_I1.JPG

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The Bank of England is prepared to raise interest rates in the new post-crisis high, indicates the health of the UK economy is ambiguous.

Most economists polled by Reuters of the opinion that the Bank of England will raise rates to 0.75 PC today, although given conflicting signals ahead of the quarter and month, some believe that it may be unnecessary.

Inflation and pay trends have been suppressed in recent times, although most of the economic growth on a modest rebound from a weak start in the beginning of the year that the Bank of England believes was caused by bad weather.

Below are some of the other indicators, some of them less closely watched that show also mixed the fate of the fifth largest economy in the world.

Commercial property

Movements in commercial property in the UK can be a good guide to changes in the economy as a whole.

Royal Institute for the study of the commercial market of chartered surveyors was one of the first indicators of serious slowdown on the path of the recession in 2008/09.

He did one well with closely monitoring the purchasing managers index IHS Markit/purchase of foreign currency, a gauge of the broader economy.

The survey RIX pointed to a slowdown in the UK commercial property market recently, and although the event is yet to follow suit, it can only be done if you believe the stories.

Household debts

Although the consumer confidence index, mostly conducted in recent months, there are long-term warning signals about the financial health of consumers.

Official data last week showed that the number of people in England and Wales for registration as indigent hit six-year high in the second quarter.

Office for national statistics also said that household spending exceeded last year its revenues for the first time since 1988, adding to concerns about debt problems among many consumers.

Wage growth

Wage growth has repeatedly failed to pick up as the Bank of England predicts, although the Central Bank was less optimistic about the prospects recently.

In may, the Bank of England said overall wage growth on average by more than 3pc in 2018 and 2019, he stood at 2.5 PC in the final reading, but some economists believe that even this may be optimistic.

Scholars David bell and former rate-setter at the Bank of England David Blanchflower said that unemployment might need to fall below 3pc from 4.2 PC now to wage growth in particular.

They argue that underemployment, not unemployment, must become the main gauge of labor market slack. It remains elevated compared to pre-crisis level of crisis.

Look at the link between wage growth and unemployment rate over the last 15 years shows, pay has failed to move much higher – as would normally be expected despite the unemployment rate falling to the lowest since the 1970-ies.

Uncertainty

The Governor of the Bank of England mark Carney was forced to endure “unreliable boyfriend” epithet that the legislature gave it in 2014 after apparently shifters for guidance on the level of interest rates.

Mr. Carney said that the management of the Bank of England aimed at consumers and businesses, not traders and journalists. Still, the latest survey from the Bank of England on public attitudes showed a quarter of people – a record high – had no idea where interest rates were headed.

The British chamber of Commerce has argued against raising rates on the grounds that member firms prefer a stable path of monetary policy at a time of such political uncertainty.

Business confidence

No major surveys are showing growth in the private sector the UK, which in the past is consistent with the increase in interest rates by the Bank of England.

In the business environment from lloyds TSB shows business confidence remained unchanged in anticipation of leaving the UK and has weakened lately.

But the Bank of England believes that the “speed limit” of the British economy – growth rates can be maintained without increasing inflation fell to 1.5 PC year-on-year. If the Bank is right, the rate increase will be needed at a lower level of growth than in the past in order to keep inflation under control.

Reuters

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