First quarter growth weakness should be temporary, but no interest rate hike

Date: 8th May 2018

First quarter growth weakness should be temporary, but no interest rate hike soon

In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest UK economic developments (8 May):
  • GDP growth was a weaker-than-expected 0.1% (QOQ), but the figure was depressed by bad weather factors and may have been depressed by residual seasonality.
  • The next MPC announcement is on 10 May; it is highly unlikely the Bank Rate will be increased, though it is reasonable to expect one 0.25% hike by end-2018.
  • The April Markit surveys suggested continued subdued growth, whilst the public sector borrowing data were better than expected, suggesting a continued improvement in the public finances.

There have been several key Brexit developments in the past fortnight:
  • The Report Stage of the EU (Withdrawal) Bill is continuing in the House of Lords. The Government has now been defeated on ten amendments. The two most important, arguably, relate to negotiating a customs union and insisting on Parliamentary approval of the outcome of negotiations with the EU.
  • The European Commission released a note outlining the topics for discussions on the future UK-EU framework at forthcoming meetings.

Both the ECB and the European Commission remain fairly upbeat about the economic prospects for the Eurozone, despite evidence of a recent softening in activity.

Ruth Lea said, 'Recorded GDP growth for 2018Q1 was disappointing, but the weather was unseasonably cold in March and there does seem to be some evidence of residual seasonality in first quarter figures. Growth should be better for the rest of the year, even if there are no underlying improvements. There are, however, reasons to believe that there will be underlying improvements, not least of all the recovery in real earnings growth driving household consumption and hence GDP growth.'For full story: http://www.arbuthnotgroup.com/economic_perspectives_group.html

Press enquiries:

Arbuthnot Banking Group PLC:

Ruth Lea, Economic Adviser
07800 608 674, 020 8346 3482
ruthlea@arbuthnot.co.uk  
Follow Ruth on Twitter @RuthLeaEcon

Maitland:
Sam Cartwright
020 7379 4415
Jais Mehaji
020 7379 5151
arbuthnot@maitland.co.uk

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Arbuthnot Banking Group plc published this content on 08 May 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 08 May 2018 09:14:01 UTC