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UK Economic Outlook

UK Economic Outlook. Solihull Business Forum – 29 th October 2012 Glynn Jones West Midlands Agency. GDP and inflation forecasts. GDP projection based on market interest rate expectations and £375 billion asset purchases. GDP and inflation forecasts.

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UK Economic Outlook

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  1. UK Economic Outlook Solihull Business Forum – 29th October 2012 Glynn Jones West Midlands Agency

  2. GDP and inflation forecasts GDP projection based on market interest rate expectations and £375 billion asset purchases West Midlands Agency

  3. GDP and inflation forecasts CPI inflation projection based on market interest rate expectations and £375 billion asset purchases West Midlands Agency

  4. Global Outlook

  5. GDP in selected countries and regions Sources: Eurostat, Indian Central Statistical Organisation, Instituto Brasileiro de Geografia e Estatística, National Bureau of Statistics of China, Thomson Reuters Datastream and US Bureau of Economic Analysis. (a) Real GDP measures (b) Non seasonally adjusted. West Midlands Agency

  6. Euro-area bond yields Selected European ten-year government bond yields(a) Source: Bloomberg. (a) Yields to maturity on ten-year benchmark government bonds. West Midlands Agency

  7. Trade performance Ratios of UK exports to UK-weighted rest of G7 imports(a) Sources: Eurostat, Japan Cabinet Office, ONS, Statistics Canada, Thomson Reuters Datastream, US Bureau of Economic Analysis and Bank calculations. (a) Chained-volume measures of UK goods (services) exports divided by real imports of goods (services) in Canada, France, Germany, Italy, Japan and the United States, weighted using UK 2011 goods (services) export shares from the 2012 Pink Book. UK goods exports data have been adjusted for MTIC fraud by an amount equal to the ONS’s goods imports adjustment. West Midlands Agency

  8. Domestic Outlook

  9. Demand & Output GDP and sectoral output(a) (a) Chained-volume measures. GDP is at market prices. Indices of sectoral output are at basic prices. West Midlands Agency

  10. Manufacturing Score 5 Services 4 3 2 1 0 -1 -2 -3 -4 -5 2000 2002 2004 2006 2008 2010 2012 Demand & Output Business investment West Midlands Agency

  11. Demand & Output Real household consumption and income & Savings Ratio (a) Includes non-profit institutions serving households. (b) Total available household resources, deflated by the consumer expenditure deflator. (c) Chained-volume measure. West Midlands Agency

  12. Supply & Productivity Output & Private Sector Employment West Midlands Agency

  13. Supply & Productivity Whole-economy and sectoral labour productivity West Midlands Agency

  14. Supply & Productivity Regional economies: the West Midlands West Midlands Agency

  15. Costs & Prices

  16. 7 Percentage change on a year earlier CPI 6 RPIX 5 RPI 4 3 2 1 0 -1 -2 -3 2000 2002 2004 2006 2008 2010 2012 Costs & Prices Consumer Price Inflation West Midlands Agency

  17. Costs & Prices US dollar oil and commodity prices West Midlands Agency

  18. Costs & Prices Corporate profit share (excluding financial corporations and the oil sector) West Midlands Agency

  19. Costs & Prices Private sector pay settlements(a) Sources: Bank of England, Incomes Data Services, Industrial Relations Services, the Labour Research Department and ONS. (a) Three-month mean. West Midlands Agency

  20. Summary

  21. Monetary Policy • Exceptionally low interest rates • Quantitative easing • FPC recommendation on liquidity buffers • Extended Collateral Term Repo (ECTR) • Finance for Lending Scheme West Midlands Agency

  22. Inflation Report - May 2012 www.bankofengland.co.uk/publications/inflationreport/index.htm

  23. Funding for Lending Scheme Net Lending Net Lending 0.5% - 1.5% 0.25% FEE 5% of existing loans + new net lending 5% of existing loans AMOUNT

  24. Whilst reports of production ‘on-shoring’ continue, they are for the most part modest • Modest rise in repatriation of production • In services off-shoring continues • Key drivers: • Rising production & transport costs • Quality • Diversify supply chains • Impact – low volume, high value-added • Where firms have moved supply from the Far East, it more often to low labour cost centres in Europe

  25. Many manufacturers express concerns over supply chain and skills capacity

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