You are here: Home - Investing - Experienced Investor - News -

Bank of England member gives upbeat assessment of UK economy

Written by:
While Brexit and weakening real incomes may drag on the UK economy, economic growth should be supported by a strong global economy, less household debt and continued low interest rates, says Michael Saunders, a member of the rate-setting committee for the Bank of England.

He believes jobs growth may be stronger than currently expected. He said: “The view of the external consensus is that this decline in unemployment is now probably over, and that unemployment is likely to stabilise or rise slightly this year. But my hunch is that the labour market will probably tighten further this year, with the jobless rate dropping to – and perhaps even below – 4% during 2018.”

He justified this view by saying that the economy and labour demand are likely to hold up better than many expect. He said wider labour market trends were positive, in spite of weaker data more recently. Firms’ hiring intentions are slightly above average and the level of job vacancies is near a record high.

He said households and businesses still expect Brexit to damage the economy over coming years, which is already having some impact on activity, particularly investment and housing. While consumers’ real incomes have been squeezed, he added, inflation has probably peaked.

Saunders said that the economy also continues to be supported by several major positives: “First, global growth is buoyant, with broad-based expansion across the US, EU and Asia, and marked upturns in world trade and investment. All this, plus the extra boost from sterling’s depreciation since 2015, is supporting exports, business confidence and asset prices in the UK.

“Overall corporate and household balance sheets in the UK have improved significantly in recent years, with lower debt levels (relative to income)…Monetary conditions remain supportive, with low interest rates and reasonable credit availability. There is little sign that the recent 25bp hike has triggered an outsized reaction from households, businesses and financial markets.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
Majority of Brits face issues with rogue property agents

More than half of Brits who bought, sold or rented a home in the last five years had issues with...