Making sense of our current economic landscape with Vistage Economist Roger Martin-Fagg 

Currently there is nothing but good news! All the economic indicators are set fair and for the first time in ten years the Bank of England has signposted that interest rate rises are likely within the next two years. In this report:

  • For economists it is a perplexing time
    The UK economy is at full employment and yet average earnings are only growing at 2.3%. This is presumably because employers are having to increase pension contributions for employees and keeping wage growth low is the only way to control unit labour cost.
  • UK house prices
    There is a lack of stock coming onto the market, this probably due to the election with sellers waiting to see if there will be changes in stamp duty. The bank of mum and dad is now the ninth largest source of finance for house purchase. 
  • The Election
    At the time of writing the labour manifesto has just been published. There is a lot there which will appeal to the under 40 year olds with teenage children who are not earning 80k a year. 
  • Europe, China and the rest of the world
    The majority of Americans in a recent poll thought the economy would continue to improve but they were less confident their President would! Meanwhile the EU as a whole is growing at 2%, the same as the USA and the UK. This will continue.

All the indicators suggest stable growth is in prospect for the UK and the world. The UK will face a severe and growing labour shortage. Interest rates are rising in the USA, and will begin to rise in the UK and the EU next year. Assuming the signs of a soft Brexit come through early on then growth will be maintained. We await the outcome of the election and the negotiations.

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Economic Update May 2017