Economic Update

Economic Update

Peter Andrews

Agency for Greater London

Bank of England

November 2011


Prospects for activity and inflation


Chart 1 Nov GDP projection; market interest rate exps and £275 bn asset purchases

Aug GDP projection; market interest rate exps and £200 bn asset purchases


Chart 1.1 Bank Rate and forward market interest rates


Chart 5.6 Nov CPI inflation projection; mkt interest rate exp and £275 bn asset purchases

Chart 5.7 Aug CPI inflation projection; mkt interest rate exps and £200 bn asset purchases


Euro area developments and risks

• Extreme outcomes excluded from fan charts• But projections capture risks already reflected

in:– Asset prices– Bank funding costs– Confidence


Money and asset prices


Chart 1.3 Selected European ten-year spot government bond yields


Chart 1.8 UK banks’ longer-term funding spreads


Chart 1.9 Term issuance by major UK lenders in public markets(a)

Sources: Bank of England, Dealogic and Bank calculations.

(a) Data as at 9/11/11, shown at a quarterly frequency up to 2011 Q3. Includes debt issued by Banco Santander, Bank of Ireland, Barclays, Co-operative Financial Services, HSBC, Lloyds Banking Group, National Australia Bank, Nationwide, Northern Rock and Royal Bank of Scotland. Term issuance refers here to securities with an original contractual maturity or earliest call date of at least 18 months. It includes subordinated lower Tier 2 and Tier 3 capital instruments with debt features.(b) Senior debt issued under HM Treasury’s Credit Guarantee Scheme.


Chart 1.10 Loans to UK businesses by size


Corporate credit availability by firm size

Credit Conditions Survey, Oct 2011


Household secured credit availability(a)


RICS: regional house prices over past 3 months


Demand, output, capacity and employment


Chart B Net trade as a percentage of GDP(a)

(a) Chained-volume measures. Excluding the estimated impact of MTIC fraud.


Chart 2.11 Household consumption and real income


Chart 2.9 Contributions of expenditure components to changes in demand in recessions and recoveries


Chart 2.12 Business investment (a)

(a) Chained-volume measure.(b) Recessions are defined as in Chart 2.8.

Chart 2.1 UK business and consumer confidence

Sources: BCC, CBI, CBI/PwC, research by GfK NOP for the EC, ONS and Bank.

(a) Data for manufacturing, financial and consumer/business services surveys weighted using shares in nominal value added.(b) Confidence about turnover. Nsa data for manufacturing and services surveys weighted using shares in nominal value added. (c) Aggregate index derived by averaging answers to Qs 1-4 and 8 in the GfK NOP survey carried out for the EC. Quarterly averages of monthly data. The diamond shows data for October.


Agents’ construction scores

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2002 2004 2006 2008 2010


Chart 3.9 Survey measures of capacity utilisation

Chart 3.8 Labour productivity


Chart 3.4 Public and private sector employment


Change in LFS unemployment rate (three months to August 2011 compared with three months to August 2010)


Costs and prices


Chart 4.2 Direct contribution of energy prices to CPI inflation and Bank staff’s central estimate of VAT contribution


Chart 4.5 Dollar oil and industrial metals prices


Chart 4.8 Measures of domestically generated inflation

Economic Update

Peter Andrews


Bank of England

November 2011

Economic Update

Documents

Transcript of Economic Update