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☆ European markets head for mixed open as sentiment falters
▼ + stars: | 2023-11-21 | by ( Holly Ellyatt | ) www.cnbc.com time to read: +1 min

Jeremy Hunt on the second day of the Conservative Party Conference on Oct. 2, 2023, in Manchester, England. U.K. public sector net borrowing excluding banks was £14.9 billion ($18.68 billion) in October, the second-highest level of borrowing for the month since records began in 1993. It was also higher than consensus forecasts and a March forecast by the independent Office for Budget Responsibility of £13.7 billion. Tax receipts were £2.7 billion higher year on year at £57.9 billion. It comes ahead of a government budget update Wednesday in which Finance Minister Jeremy Hunt may announce tax cuts as he seeks to prioritize growth, according to the BBC.

Persons: Jeremy Hunt, Ruth Gregory, Hunt, Gregory said, Gregory, Lindsay James, — Jenni Reid Organizations: Conservative Party Conference, Capital Economics, Quilter Investors Locations: Manchester, England

"We know that the British economy recovered faster from the pandemic than anyone previously thought and data out today once again proves the doubters wrong," finance minister Jeremy Hunt said. And that's before the full drag from higher interest rates has been felt," said Ruth Gregory, deputy chief UK economist at Capital Economics. The upward revisions were concentrated in 2020 and 2021, during the height of the pandemic and immediate aftermath. Growth in 2021 was revised to 8.7% from 7.6%, while the size of 2020's historic slump was reduced to 10.4% from 11.0%, in line with preliminary guidance on Sept. 1. Growth in 2022 was revised up to 4.3% from 4.1%.

Persons: Rachel Adams, Jeremy Hunt, Ruth Gregory, Thomas Pugh, Capital's Gregory, David Milliken, Andy Bruce, William James, Toby Chopra Organizations: Oxford, REUTERS, National Statistics, European Union, Capital Economics, The Bank of England, RSM, Reuters Graphics Reuters, ONS, Thomson Locations: Britain, London, Germany, France, United States, Japan, Italy, Canada, Ukraine

☆ The UK economy is bigger than we thought. It still has ‘a growth problem’
▼ + stars: | 2023-09-04 | by ( Hanna Ziady | ) edition.cnn.com time to read: +5 min

London CNN —The UK economy recovered from the Covid-19 pandemic much faster than previously thought, according to major revisions of official statistics that have erased Britain’s laggard status overnight. The ONS had said as recently as last month that UK GDP had still not reached its pre-pandemic size by the second quarter of this year. “UK growth has still been very sluggish, even if it’s not at the bottom,” said Prof. Huw Dixon, who leads research in economic measurement at the National Institute of Economic and Social Research. So while the size of the economy is bigger than we thought, Britain still has a growth problem.”Richer dataIn 2020, the UK economy suffered its biggest slump in more than three centuries, recovering sharply the following year off a low base. Annual GDP growth for 2021 was also revised up by 1.1 percentage points to 8.7%.

Persons: ” Ruth Gregory, “, ”, Huw Dixon, ” Dixon, ” John Springford, Richer, That’s, Frost, Darren Morgan, Henry Nicholls, Jeremy Hunt, Gregory, Nomura Organizations: London CNN, Office, National Statistics, ONS, Capital Economics, National Institute of Economic, Social Research, CNN, Centre, European Reform, Getty Images, Bank of England Locations: Germany, United States, Canada, Japan, Italy, France, Britain, Petticoat Lane, AFP, United Kingdom

Net borrowing, excluding state-owned banks, stood at 4.3 billion pounds ($5.49 billion) last month, less than the median forecast of 5.0 billion pounds in a Reuters poll of economists. In the first four months of the financial year, borrowing stood at 56.6 billion pounds. "As inflation slows, it's vital that we don’t alter our course and continue to act responsibly with the public finances," Hunt said in a statement after the data. Interest costs rose by 1.5 billion pounds compared with July last year to 7.7 billion pounds, the highest for July since records began in April 1997. The public finances were boosted by inflows of self-assessed income tax receipts which are typically strong in July, which stood at 11.8 billion pounds, 2.5 billion pounds more than in July last year.

Persons: Jeremy Hunt, Jessica Taylor, Handout, Hunt, Rishi Sunak, Liz Truss's, Ruth Gregory, Gregory, Gabriella Dickens, William Schomberg, Sachin Ravikumar, Andrew Heavens, Tomasz Janowski Organizations: REUTERS Acquire, Reuters, Bank of England, Conservative Party, Treasury, Capital Economics, Senior, National Statistics, Britain's, Thomson Locations: London, Britain

☆ Why inflation makes Britain’s debt the costliest among rich economies
▼ + stars: | 2023-08-22 | by ( Hanna Ziady | ) edition.cnn.com time to read: +4 min

Interest payable on UK central government debt hoovered up £7.7 billion ($9.8 billion) last month alone, hitting a record for July, the Office for National Statistics said Tuesday. That’s double the share in Italy, whose dependence on inflation-linked debt comes second only to that of the UK among advanced economies, according to Fitch Ratings. According to Fitch, Britain now spends more to service its debt than any other developed economy, as a percentage of government revenue. In a statement Tuesday, Hunt said: “As inflation slows, it’s vital that we don’t alter our course and continue to act responsibly with the public finances. Only by sticking to our plan will we halve inflation, grow the economy and reduce debt.”

Persons: That’s, ”, Ellie Henderson, Fitch, ” Ruth Gregory, Jeremy Hunt “, Gregory, Hunt Organizations: London CNN, National Statistics, United, Fitch, “, Investec, AAA, Capital Economics, CNN, Conservative Locations: Ukraine, United States, Italy, Fitch, Britain, London

Official data showed sales volumes last month were 1.2% lower than in June. Food stores sales volumes fell by a monthly 2.6% while non-food stores sales volumes fell by 1.7%. However, July's data represented only the second time that sales volumes fell on a month-to-month basis so far in 2023, suggesting resilience in consumer demand. Market research firm GfK reported last month that consumer confidence fell in July for the first time since January. Retail sales volumes were 3.2% lower than a year earlier, the ONS said, compared with economists' forecasts for a 2.1% decline.

Persons: Sterling, Heather Bovill, Ruth Gregory, GfK, Samuel Tombs, BoE, Tombs, Spencer, James Davey, Kate Holton, Susan Fenton Organizations: Reuters, Office, National Statistics, Department, Bank of England, Capital Economics, Macroeconomics, Thomson

The ONS said falling gas and electricity prices were the biggest driver behind the drop in inflation, while food price inflation also eased. Despite the drop in the headline figure, Britain retains one of the highest rates of price growth in Western Europe, with only Iceland and Austria suffering higher inflation. The BoE is watching core inflation - which strips out volatile food and energy prices - and consumer services prices closely. Services inflation picked up to 7.4% from 7.2% in June. Financial markets on Wednesday showed a roughly two-thirds chance that the BoE's Bank Rate will hit 6% in February, up from 5.25% now.

Persons: Phil Noble, BoE, Sterling, Ruth Gregory, Jeremy Hunt, Andy Bruce, William Schomberg Organizations: REUTERS, Bank of, National Statistics, U.S, ONS, Bank, Capital Economics, Financial, Manufacturers, Thomson Locations: Altrincham, Britain, Bank of England, Western Europe, Iceland, Austria, BoE's

Official data on Friday showed the economy grew 0.2% in the second quarter, against the consensus for a flat reading in a Reuters poll of economists. The strong showing bolstered bets that the BoE would keep on raising interest rates, given the central bank stressed this month that resilience in the economy was one of the factors that would underpin its judgement. The central bank itself had pencilled in growth of 0.1% for the second quarter. "With much of the drag from higher interest rates still to come, we are sticking to our below-consensus forecast that the UK is heading for a mild recession later this year," said economist Ruth Gregory from consultancy Capital Economics. Reporting by Andy Bruce and David Milliken; editing by William James, Kate Holton and Christina FincherOur Standards: The Thomson Reuters Trust Principles.

Persons: Sterling, BoE, Neil Birrell, Jeremy Hunt, Ruth Gregory, Andy Bruce, David Milliken, William James, Kate Holton, Christina Fincher Organizations: Bank of England, U.S ., Reuters, Bank of, Miton, National Statistics, Manufacturing, Reuters Graphics, Capital Economics, Thomson Locations: Bank of England, Britain, Germany, France, Italy, United States

LONDON — The U.K. economy beat expectations with 0.2% growth in the second quarter, boosted by household consumption and manufacturing output, the Office for National Statistics said Friday. The economy expanded by 0.5% in June, beating a forecast of 0.2% growth. It follows monthly GDP growth of 0.1% in May and 0.2% in April. Output was bolstered by 1.6% growth in manufacturing and 0.7% in production in the second quarter, while services grew by 0.1%. In its most recent monetary policy report, it said it expects quarterly GDP growth to remain around 0.2% in the near term.

Persons: eking, King Charles III, Mike Coop, CNBC's, Coop, Jeremy Hunt, BoE, Ruth Gregory Organizations: National Statistics, Reuters, Bank of, ONS, Morningstar, Bank of England, of England, IMF, Finance, Capital Economics Locations: Germany, France, Italy

☆ UK shoppers boost spending again despite inflation's squeeze
▼ + stars: | 2023-06-23 | by ( William Schomberg | ) www.reuters.com time to read: +3 min

But Friday's retail sales figures showed that, at least for now, British consumers were weathering the cost-of-living storm. "But our view is still that the growing drag on activity from higher interest rates will eventually tip the economy into recession, generating a 0.5% peak to trough fall in real consumer spending." The statistics agency said the one-off holiday to celebrate the king's coronation was not factored into its seasonal adjustments, meaning it helped to boost the sales volumes reading. Retail sales volumes in May were 2.1% lower than a year earlier. The Reuters poll of economists had pointed to a fall of 2.6% in sales volumes on an annual basis.

Persons: Sterling, King Charles, Ruth Gregory, Samuel Tombs, Heather Bovill, William Schomberg, William James, Catherine Evans Organizations: Bank of, Bank of England, U.S ., Office, National Statistics, Capital Economics, ONS, Reuters, Thomson Locations: Britain

☆ UK economy grows by 0.1% in the first quarter but inflation continues to weigh
▼ + stars: | 2023-05-12 | by ( Jenni Reid | ) www.cnbc.com time to read: +2 min

LONDON — The U.K. economy grew by 0.1% in the first quarter, following an unexpected contraction in March, official figures showed on Friday. The construction sector expanded by 0.7%, while manufacturing performance went up by 0.5% in the first quarter, with 0.1% growth logged in services and production. The national statistics agency said there was no growth in real household expenditure, as incomes remained under the squeeze of higher prices. We still have inflation that is too high, growth is still not as high as we would like it to be, and when I talk to my fellow finance ministers we all talk about the same thing. Labor supply, productivity, how we are going to increase our long-term growth rates so that we can pay for the increasing number of things that tax payers want governments to do," Hunt continued.

☆ Analysis: Why is UK inflation so high?
▼ + stars: | 2023-04-19 | by ( Andy Bruce | ) www.reuters.com time to read: +4 min

Annual consumer price inflation (CPI) in Britain fell to 10.1% last month but defied forecasts for a bigger drop from February's 10.4%, according to data published on Wednesday. "Inflation in the UK has risen further and stayed higher than elsewhere as the UK has experienced the worst of both worlds: a big energy shock like the euro zone and labour shortages - even worse than the U.S.," said Ruth Gregory, deputy chief UK economist at consultancy Capital Economics. British consumer energy prices were 79% higher in March than their level two years earlier, the biggest increase in western Europe. Britain's high rate of energy inflation reflects its heavy reliance on gas for power generation and home heating as well as the poor energy efficiency of its housing stock. But domestically generated price pressures are likely to slow the pace of decline in headline inflation.

☆ UK inflation stays at 10% as bread rises at record clip. Here’s why it’s proving hard to beat
▼ + stars: | 2023-04-19 | by ( Hanna Ziady | ) edition.cnn.com time to read: +5 min

London CNN —UK inflation remained above 10% in March, far higher than in the United States and Europe, as bread prices rose at a record pace. Energy an ‘Achilles’ heel’The United Kingdom is a net importer of energy, unlike the United States. UK inflation to fall sharplyThe good news is that UK inflation is expected to fall rapidly through the remainder of the year, as lower wholesale gas prices feed through to household energy bills. From April, “UK inflation might start to drop faster than in Europe,” he said. But core inflation could take longer to fall in the United Kingdom, according to Gregory of Capital Economics.

Despite the improvement, British economic output remained 0.6% below its level of late 2019, the only G7 economy not to have recovered from the COVID-19 pandemic. Ruth Gregory at Capital Economics said Friday's figures showed high inflation had taken a slightly smaller toll than previously thought. But the picture could darken again if recent turmoil in the global banking sector leads to lenders reining in loans. BUSINESS INVESTMENT FALLSThe data suggested businesses remained cautious. The ONS said increased foreign earnings by companies, particularly in the energy sector, helped narrow the deficit.

Economic output increased by 0.1% from the previous three months after shrinking by 0.1% in the third quarter, which was a smaller contraction than previously thought. The Office for National Statistics (ONS) had previously said the economy showed no growth in the fourth quarter. Britain's dominant services sector rose by 0.1%, boosted by a nearly 11% jump for travel agents. The ONS said changes to the way it calculates seasonal adjustments to the data were behind the big revision. The ONS said increased foreign earnings by UK companies, particularly in the energy sector, helped narrow the deficit.

LONDON, March 10 (Reuters) - Children returning to school after an illness-ravaged December provided an unexpected, one-off boost to Britain's economy in January, when growth in output exceeded forecasts, data showed on Friday. The Office for National Statistics (ONS) said Britain's economy expanded 0.3% month-on-month, after a drop of 0.5% in December - a reading that is likely to further allay recession fears. ONS Director of Economic Statistics Darren Morgan said the economy had shown zero growth over the last three months and the past year. The ONS said half of the 0.3% growth rate comprised the education sector, as a result of children returning to school after a significant drop in attendance in December. Fear of contracting COVID-19 over Christmas may also have contributed to children being taken out of school early.

☆ UK government runs unexpected budget surplus in January: ONS
▼ + stars: | 2023-02-21 | by ( ) www.cnbc.com time to read: +1 min

Britain's government ran an unexpected budget surplus in January, reflecting strong income tax receipts that could give finance minister Jeremy Hunt a little more leeway than he thought as he prepares his annual budget. The Office for National Statistics (ONS) on Tuesday reported a seasonal budget surplus of £5.42 billion ($6.51 billion) in January, a month in which millions of Britons pay their income tax receipts. The ONS reported self-assessment income tax receipts of £21.9 billion, the highest January figure since monthly records began and £5.5 billion more than last year. "This suggests that the Chancellor will have some wiggle-room in the budget to fund near-term tax cuts and/or spending rises," said Ruth Gregory, deputy chief UK economist at consultancy Capital Economics, of the January surplus. The figures, which are not adjusted for inflation, showed the tax receipts were offset by £6.7 billion of interest payable on index-linked government bonds, the highest January total on record.

☆ UK government runs unexpected budget surplus in January - ONS
▼ + stars: | 2023-02-21 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 21 (Reuters) - Britain's government ran an unexpected budget surplus in January, reflecting strong income tax receipts that could give finance minister Jeremy Hunt a little more leeway than he thought as he prepares his annual budget. The Office for National Statistics (ONS) on Tuesday reported a seasonal budget surplus of 5.42 billion pounds ($6.51 billion) in January, a month in which millions of Britons pay their income tax receipts. A Reuters poll of economists had pointed to public sector net borrowing, excluding state-owned banks, of 7.85 billion pounds for January. The ONS reported self-assessment income tax receipts of 21.9 billion pounds, the highest January figure since monthly records began and 5.5 billion pounds more than last year. The government spent more than 10 billion pounds on its energy support for households in January, while it also paid 2.3 billion pounds to the European Union to settle a dispute over customs duties.

☆ Energy support, debt interest help to swell UK borrowing
▼ + stars: | 2023-01-24 | by ( ) www.reuters.com time to read: +2 min

LONDON, Jan 24 (Reuters) - Britain's government borrowed more last month than in any December since monthly records began 30 years ago, reflecting the huge cost of energy support, soaring debt interest linked to rising inflation. The Office for National Statistics (ONS) said public sector net borrowing, excluding state-owned banks, was 27.4 billion pounds ($33.97 billion) in December, up from 10.7 billion pounds a year earlier. A Reuters poll of economists had pointed to borrowing of 17.75 billion pounds for December. The ONS said the large figure for borrowing in December was "largely because of a sharp rise in spending on energy support schemes and an increase in debt interest." Borrowing for December was some 9.8 billion pounds more than the 17.6 billion pounds forecast by the Office for Budget Responsibility (OBR).

☆ Sterling rises after UK economy beats expectations
▼ + stars: | 2023-01-13 | by ( Harry Robertson | ) www.reuters.com time to read: +2 min

LONDON, Jan 13 (Reuters) - The pound rose on Friday against both the dollar and euro after data showed U.S. inflation cooled in December and the British economy beat expectations in November. Sterling was 0.17% higher against the dollar at $1.223, and was heading for a weekly gain of more than 1%. The euro remained on track for a weekly increase against the pound. "We still think a recession is on its way," said Ruth Gregory, senior UK economist at consultancy Capital Economics. "It is too soon to conclude the economy will be able to get through this period of high interest rates and high inflation largely unscathed."

☆ UK budget: Britain is bringing back austerity. Here's why
▼ + stars: | 2022-11-16 | by ( Julia Horowitz | ) edition.cnn.com time to read: +5 min

The country is staring down the barrel of a grueling recession, and investors remain on edge as interest rates rise. That requires Hunt, who has acknowledged that Britain faces “extremely difficult” decisions, to pull off a delicate balancing act. When the government adopted an austerity program in 2010 on the heels of the Great Recession, it shaved 1% off the country’s GDP, according to the UK budget watchdog. Just four years ago, former Prime Minister Theresa May pledged to bring nearly a decade of austerity to a close. “If we hadn’t had Brexit, we probably wouldn’t be talking about an austerity budget this week.

☆ British government to usher in new era of austerity in effort to restore market confidence
▼ + stars: | 2022-11-15 | by ( Elliot Smith | ) www.cnbc.com time to read: +6 min

We're going to see spending cuts," Hunt told the BBC on Sunday, while also promising the government would deliver a new and more focused plan to help with household energy bills beyond April. First, an increase in council tax with local authorities allowed to raise the level of council tax above 3% without a referendum," Raja said. "And second, an increase in both the duration and scale of the windfall tax on oil and gas 'excess profits'." Spending cuts, again executed via "stealth," could take the form of "nominal cash freezes to departmental budgets," Raja said, with spending budgets topped up minimally going forward. "If he wants to reassure the markets, he will have to announce early action in the form of a big fiscal tightening.

☆ UK's Rishi Sunak inherits in-tray of anarchy as he takes over as PM of country in crisis
▼ + stars: | 2022-10-25 | by ( Karen Gilchrist | ) www.cnbc.com time to read: +5 min

Rishi Sunak has been named as the U.K.'s new prime minister and the country's first leader of color. Sunak's officiation is momentous not least in that it marks Downing Street's first prime minister of color and the U.K.'s youngest leader of modern times. Uniting a divided Conservative PartySunak's task as prime minister is further complicated by deep and severe divisions within the ruling Conservative Party. Rishi Sunak is tasked with a daunting in-tray as the U.K.'s new prime minister, including a crisis in public finances, political infighting and soaring energy bills. Chris Mcgrath | Getty Images News | Getty Images

☆ UK economy: Rishi Sunak only has unpleasant choices as prime minister
▼ + stars: | 2022-10-25 | by ( Julia Horowitz | ) edition.cnn.com time to read: +7 min

There’s little appetite for government spending cuts after years of austerity in the wake of the 2008 global financial crisis. Plus, failing to help households deal with surging living costs could prove politically devastating and further weigh on the economy. Finance minister Jeremy Hunt got the ball rolling last week when he reversed £32 billion ($37 billion) in tax cuts that formed the bedrock of Truss’ plan to boost growth. Risk of a ‘doom loop’Investors and economists expect that the government will announce a mixture of tax increases and spending cuts shortly. No one wants to repeat the errors of the brief Truss era, when her gamble that unfunded tax cuts would jumpstart growth backfired spectacularly.

☆ UK gilts jump as Rishi Sunak emerges victorious in PM race
▼ + stars: | 2022-10-24 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 24 (Reuters) - British government bond prices rose sharply on Monday as former finance minister Rishi Sunak cruised to victory in the race to succeed Liz Truss as prime minister, removing at least one source of uncertainty for bond investors. Sunak's rivals, former prime minister Boris Johnson and cabinet minister Penny Mordaunt, dropped out of the Conservative Party leadership race on Sunday and Monday. Gilt jumped briefly on the news that Sunak, a former finance minister, had won the contest. "The fall in gilt yields on the news today that Rishi Sunak will become the UK's next Prime Minister has reduced the chances of a significant fiscal consolidation," said Ruth Gregory, economist at consultancy Capital Economics. The spread between 10-year German and British government bond yields narrowed sharply to 146 bps, after rising above 165 bps on Friday.

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