Ellie Henderson, UK economist at Investec, claimed that “The economic data released this week portrayed a somewhat Goldilocks scenario for the UK.” This past week, data showed that GDP rose by 0.6% in the second quarter and 0.7% in the first, thereby doing a significant turnaround from the recession that hit the nation last year.

UK inflation also cooled more than expected, edging up to 2.2%, while inflation in the services sector slumped to 5.2%; its lowest level over the past two years. The labor market also appears to be steadying, with jobs data showing a hiring spurt despite regular wage growth heading toward a two-year low of 5.4%.

According to forecasts compiled by Bloomberg, economists are expecting the UK economy to expand by 0.3% in each quarter until the end of 2025. 1% growth is expected next year before rising to 1.3% in 2025 and 1.5% in 2026.

The post UK Economy Slowing Down After Blockbuster First Half of 2024 appeared first on theprimarymarket.com.

“The U.K. economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year,” Liz McKeown, the director of economic statistics at the Office for National Statistics announced. Growth was primarily spurred on by the service sector, in particular, technology, legal services, and scientific research. This is a strong turnaround from the end of 2023, when the services sector stumbled and UK GDP contracted by 0.3%. Industrial production and construction also faltered.

While the service sector strengthened in the second quarter, the film and TV industry stumbled as UK production schedules continued to be disrupted as a result of last year’s strikes by the Screen Actors Guild in the US. Despite the recent economic uptick, analysts are expecting it to slow in the coming months, with the service industry expected to contract by 0.1%.

The post UK Continues Economic Recovery Over Second Quarter appeared first on theprimarymarket.com.

Core inflation, which excludes alcohol, energy, food, and tobacco, declined 3.5% from June while rising 3.3% for the year to date. Services sector inflation, which is closely scrutinized by the central bank policymakers, fell from 5.7% to 5.2% in July compared to the previous month.

“Inflation undershooting the Bank of England’s expectations will be seen as a positive sign that price pressures are continuing to normalize for households and businesses,” Martin Sartorius of CBI observed. Money markets are now pricing a 42% chance that the Bank of England will cut its interest rate to 4.75% at its policy meeting next month. This is a rise from the previous 36% probability of an interest rate cut.

The post UK Inflation Rises Less Than Expected appeared first on theprimarymarket.com.

Stubborn inflation has dashed investor hopes that the Bank of England would soon contemplate the introduction of interest rate cuts. “Improving interest rate expectations in recent weeks has led to some forecasters predicting the first cut in the first half of 2024, with lenders slashing mortgage rates as they battle it out to retain their existing clients and attract new business,” Alice Haine, personal finance analyst at Bestinvest explained.

Haine added that this unexpected rapid rise in inflation has come as a blow to mortgage holders and prospective buyers, who had hoped for interest rate cuts to be introduced as a means of driving down mortgage rates.

The post UK Inflation Rises to 4%, Dashing Hopes of an Interest Rate Cut appeared first on theprimarymarket.com.

While the recent drop in housing prices is but a small dent in the 20% increase since the height of the COVID-19 pandemic, rising wage growth in the UK is helping to make property more affordable. “Households should be in a better place to capitalize on the improvement in affordability, given the fact we expect real incomes to tick up over the next year or so,” Gabriella Dickens, senior UK economist at Pantheon Macroeconomics observed.

Oxford Economics projected a 4% drop in UK house prices over the course of 2024, with most strategists expecting a drop between zero to 2%. Wages are forecasted to rise by 7.1% between the fourth quarter of 2022 and 2023 and 4% over the 12 months leading to the fourth quarter of 2024, according to Bloomberg Economics.

The post UK Property on Course for Record Affordability appeared first on theprimarymarket.com.

Fitch chose not to follow in the footsteps of Moody’s Investors Service, which raised its UK outlook a month ago from negative to stable after claiming that “policy predictability” had been restored. This places increasing pressure on Sunak, who has been under scrutiny by his Conservative Party as he struggles to shift public opinion in his favor ahead of a likely election next year.

Fitch projects UK economic growth to be 0.5% in 2023, with a mild recession pulling growth down to 0.3% in 2024 before leaping to a 1.8% growth rate in 2025. The government’s fiscal deficit is expected to amount to 5.4% of GDP for 2023. The UK’s outlook was cut last October when Sunak’s, predecessor, Liz Truss, announced a £45 billion package of tax cuts.

The post UK Debt Outlook Remains Negative, Credit Agency Fitch Confirms appeared first on theprimarymarket.com.

“Today’s announcement is a turning point for the future of AI infrastructure and development in the UK,” Prime Minister Rishi Sunak declared on Thursday. This funding will more than double Microsoft’s data center footprint in Britain.

According to the UK government, this investment will be used by Microsoft to bring over 20,000 of its state-of-the-art Graphics Processing Units to Britain, thereby providing a launchpad for machine learning and developing AI. Plans also include training local British workers so that they are equipped with the skills they need to build and work with AI.

The post Microsoft to Invest $3.2 Billion in UK in AI Push appeared first on theprimarymarket.com.

While inflation has continued to fall, BoE Governor Andrew Bailey explained that a further drop needs to be achieved in order to bring inflation down to the central bank’s 2% target. “We’ve held rates unchanged this month, but we’ll be watching closely to see if further rate increases are needed. It’s much too early to be thinking about rate cuts,” Bailey revealed.

Since reaching double-digit figures, UK inflation has gradually eased to 6.7% in the year September, unchanged from the previous month. Still, this rate is higher than the rest of the G7 economies, pushing the UK to ramp up its fight against stubborn inflation.

The post Bank of England Holds Rates at 15-Year High appeared first on theprimarymarket.com.

While the BoE’s Monetary Policy Committee is yet to lower its gross domestic product estimate for late 2023 and early 2024, official data has indicated a rise in the probability of an impending recession.

“GDP growth has been weaker, the unemployment rate is higher and pay growth is finally easing across all gauges,” Bloomberg Economics observed. “Financial markets have responded to the recent flow of news by pricing in a smaller-than-50% chance that interest rates reach 5.5%, having seen a peak expectation of over 6% in the summer.”

The post Bank of England Expected to Forecast Recession Risk Ahead of General Election appeared first on theprimarymarket.com.

Goldman Sachs, Deutsche Bank, and Nomura all believe that the Bank of England will hold rates steady, backtracking from previous expectations of a September hike. Chris Turner, head of markets at ING, disagreed, claiming that a hike of 25 basis points is still likely, claiming that “a hike would provide GBP/USD with some much-needed support.” 

The sterling fell by 0.28% against the US dollar to $1.2309. Meanwhile, the euro strengthened against the British pound by 0.23%, reaching 86.55 pence.

The post Sterling Staggers Ahead of Bank of England Policy Decision appeared first on theprimarymarket.com.

Ellie Henderson, UK economist at Investec, claimed that “The economic data released this week portrayed a somewhat Goldilocks scenario for the UK.” This past week, data showed that GDP rose by 0.6% in the second quarter and 0.7% in the first, thereby doing a significant turnaround from the recession that hit the nation last year.

UK inflation also cooled more than expected, edging up to 2.2%, while inflation in the services sector slumped to 5.2%; its lowest level over the past two years. The labor market also appears to be steadying, with jobs data showing a hiring spurt despite regular wage growth heading toward a two-year low of 5.4%.

According to forecasts compiled by Bloomberg, economists are expecting the UK economy to expand by 0.3% in each quarter until the end of 2025. 1% growth is expected next year before rising to 1.3% in 2025 and 1.5% in 2026.

The post UK Economy Slowing Down After Blockbuster First Half of 2024 appeared first on theprimarymarket.com.

“The U.K. economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year,” Liz McKeown, the director of economic statistics at the Office for National Statistics announced. Growth was primarily spurred on by the service sector, in particular, technology, legal services, and scientific research. This is a strong turnaround from the end of 2023, when the services sector stumbled and UK GDP contracted by 0.3%. Industrial production and construction also faltered.

While the service sector strengthened in the second quarter, the film and TV industry stumbled as UK production schedules continued to be disrupted as a result of last year’s strikes by the Screen Actors Guild in the US. Despite the recent economic uptick, analysts are expecting it to slow in the coming months, with the service industry expected to contract by 0.1%.

The post UK Continues Economic Recovery Over Second Quarter appeared first on theprimarymarket.com.

Core inflation, which excludes alcohol, energy, food, and tobacco, declined 3.5% from June while rising 3.3% for the year to date. Services sector inflation, which is closely scrutinized by the central bank policymakers, fell from 5.7% to 5.2% in July compared to the previous month.

“Inflation undershooting the Bank of England’s expectations will be seen as a positive sign that price pressures are continuing to normalize for households and businesses,” Martin Sartorius of CBI observed. Money markets are now pricing a 42% chance that the Bank of England will cut its interest rate to 4.75% at its policy meeting next month. This is a rise from the previous 36% probability of an interest rate cut.

The post UK Inflation Rises Less Than Expected appeared first on theprimarymarket.com.

Stubborn inflation has dashed investor hopes that the Bank of England would soon contemplate the introduction of interest rate cuts. “Improving interest rate expectations in recent weeks has led to some forecasters predicting the first cut in the first half of 2024, with lenders slashing mortgage rates as they battle it out to retain their existing clients and attract new business,” Alice Haine, personal finance analyst at Bestinvest explained.

Haine added that this unexpected rapid rise in inflation has come as a blow to mortgage holders and prospective buyers, who had hoped for interest rate cuts to be introduced as a means of driving down mortgage rates.

The post UK Inflation Rises to 4%, Dashing Hopes of an Interest Rate Cut appeared first on theprimarymarket.com.

While the recent drop in housing prices is but a small dent in the 20% increase since the height of the COVID-19 pandemic, rising wage growth in the UK is helping to make property more affordable. “Households should be in a better place to capitalize on the improvement in affordability, given the fact we expect real incomes to tick up over the next year or so,” Gabriella Dickens, senior UK economist at Pantheon Macroeconomics observed.

Oxford Economics projected a 4% drop in UK house prices over the course of 2024, with most strategists expecting a drop between zero to 2%. Wages are forecasted to rise by 7.1% between the fourth quarter of 2022 and 2023 and 4% over the 12 months leading to the fourth quarter of 2024, according to Bloomberg Economics.

The post UK Property on Course for Record Affordability appeared first on theprimarymarket.com.

Fitch chose not to follow in the footsteps of Moody’s Investors Service, which raised its UK outlook a month ago from negative to stable after claiming that “policy predictability” had been restored. This places increasing pressure on Sunak, who has been under scrutiny by his Conservative Party as he struggles to shift public opinion in his favor ahead of a likely election next year.

Fitch projects UK economic growth to be 0.5% in 2023, with a mild recession pulling growth down to 0.3% in 2024 before leaping to a 1.8% growth rate in 2025. The government’s fiscal deficit is expected to amount to 5.4% of GDP for 2023. The UK’s outlook was cut last October when Sunak’s, predecessor, Liz Truss, announced a £45 billion package of tax cuts.

The post UK Debt Outlook Remains Negative, Credit Agency Fitch Confirms appeared first on theprimarymarket.com.

“Today’s announcement is a turning point for the future of AI infrastructure and development in the UK,” Prime Minister Rishi Sunak declared on Thursday. This funding will more than double Microsoft’s data center footprint in Britain.

According to the UK government, this investment will be used by Microsoft to bring over 20,000 of its state-of-the-art Graphics Processing Units to Britain, thereby providing a launchpad for machine learning and developing AI. Plans also include training local British workers so that they are equipped with the skills they need to build and work with AI.

The post Microsoft to Invest $3.2 Billion in UK in AI Push appeared first on theprimarymarket.com.

While inflation has continued to fall, BoE Governor Andrew Bailey explained that a further drop needs to be achieved in order to bring inflation down to the central bank’s 2% target. “We’ve held rates unchanged this month, but we’ll be watching closely to see if further rate increases are needed. It’s much too early to be thinking about rate cuts,” Bailey revealed.

Since reaching double-digit figures, UK inflation has gradually eased to 6.7% in the year September, unchanged from the previous month. Still, this rate is higher than the rest of the G7 economies, pushing the UK to ramp up its fight against stubborn inflation.

The post Bank of England Holds Rates at 15-Year High appeared first on theprimarymarket.com.

While the BoE’s Monetary Policy Committee is yet to lower its gross domestic product estimate for late 2023 and early 2024, official data has indicated a rise in the probability of an impending recession.

“GDP growth has been weaker, the unemployment rate is higher and pay growth is finally easing across all gauges,” Bloomberg Economics observed. “Financial markets have responded to the recent flow of news by pricing in a smaller-than-50% chance that interest rates reach 5.5%, having seen a peak expectation of over 6% in the summer.”

The post Bank of England Expected to Forecast Recession Risk Ahead of General Election appeared first on theprimarymarket.com.

Goldman Sachs, Deutsche Bank, and Nomura all believe that the Bank of England will hold rates steady, backtracking from previous expectations of a September hike. Chris Turner, head of markets at ING, disagreed, claiming that a hike of 25 basis points is still likely, claiming that “a hike would provide GBP/USD with some much-needed support.” 

The sterling fell by 0.28% against the US dollar to $1.2309. Meanwhile, the euro strengthened against the British pound by 0.23%, reaching 86.55 pence.

The post Sterling Staggers Ahead of Bank of England Policy Decision appeared first on theprimarymarket.com.