Transcript Document
Presentation to Cornwall Council Private Developers Forum 2nd March 2012 Geoff Harding Deputy Agent for South West England Overview South West Agency Quarterly figures: 2011 Q1 0.3 % Q2 0.0 Q3 0.5 Q4 -0.2 Annual: 0.8 % South West Agency GDP projection based on market interest rate expectations and £325 billion asset purchases South West Agency Projection of the level of GDP based on market interest rate expectations and £325 billion asset purchases South West Agency Bank rate and forward market interest rates Sources : Bank of England and Bloomberg. South West Agency Conditioning path for Bank Rate implied by forward market interest rates(a) South West Agency Survey measures of capacity utilisation Sources: Bank of England, BCC, CBI, CBI/PwC and ONS. South West Agency Unemployment rates Source: ONS (including Labour Force Survey). South West Agency Self-employment(a) Source: Labour Force Survey. South West Agency Broad money(a) South West Agency The construction sector – recent history South West Agency South West Agency to Q4 2011, at constant 2005 prices South West Agency South West Agency South West Agency South West Agency South West Agency Prospects South West Agency Contributions of expenditure components to changes in demand in recessions and recoveries South West Agency Household consumption and real income South West Agency Survey measures of household expectations Source: Research carried out by GfK NOP on behalf of the European Commission. South West Agency Household saving ratio South West Agency CPI Inflation projection based on market interest rate expectations and £325 billion asset purchases South West Agency Direct contribution of energy prices to CPI inflation and Bank staff’s central estimate of VAT contribution Sources: Bloomberg, Department of Energy and Climate Change, ONS and Bank calculations. South West Agency Contributions to CPI inflation South West Agency US dollar oil and commodity prices Sources: Bloomberg, S&P indices and Thomson Reuters Datastream. South West Agency Inflation expectations for a year ahead Sources: Bank of England, CBI (all rights reserved), Citigroup, ONS and YouGov. South West Agency Public sector net borrowing(a) Sources: HM Treasury, OBR Economic and Fiscal Outlooks (EFO) and ONS. South West Agency Business investment and surveys of investment intentions Sources: Bank of England, BCC, CBI, CBI/PwC and ONS South West Agency Factors likely to hold back investment Sources: CBI, CBI/PwC and ONS. South West Agency Credit conditions South West Agency Loans to individuals and private non-financial corporations South West Agency Lending to small and medium-sized enterprises(a) Sources: Bank of England, BBA, BIS and Bank calculations. South West Agency Net funds raised by UK businesses(a)(b) Sources: Bank of England, BBA, BIS and Bank calculations. South West Agency UK banks’ leverage South West Agency UK banks’ indicative longer-term funding spreads Sources: Bank of England, JPMorgan Chase & Co., Markit Group Limited and Bank calculations. South West Agency Credit Conditions Survey: spreads over reference rates on lending to corporates by firm size(a)(b) South West Agency Stock of lending to UK PNFCs(a)(b) Source: Bank of England. South West Agency Credit Conditions Survey: availability of credit to households(a) South West Agency Bank Rate and average quoted interest rates on new household borrowing South West Agency Mortgage lending by the major UK lenders(a) South West Agency SUMMARY • Growth outlook: a pick-up in 2012 H2, driven by better prospects for consumption as inflation comes down and real incomes stop falling • Factors such as the Diamond Jubilee and the Olympics will disrupt the pattern of demand. • Uncertainties remain regarding the household savings rate • Increased uncertainty is holding back investment, but a pick-up in consumption should have ‘accelerator’ effects. • Other components of demand – Government, net trade, stock building -- will be negative or flat at best. • Inflation has begun its long-promised fall as temporary factors unwind. • The risk that inflation will fall below target with continuing slack in the economy is being mitigated by the increase in QE. South West Agency Presentation to Cornwall Council Private Developers Forum 2nd March 2012 Geoff Harding Deputy Agent for South West England Real house prices following banking crises Sources: OECD and Bank calculations. South West Agency Chart 1.10 UK banks’ indicative longer-term funding spreads Sources: Bank of England, JPMorgan Chase & Co., Markit Group Limited and Bank calculations. South West Agency Indicative median interest rates on new SME variable-rate facilities(a) Sources: Bank of England, BIS and Bank calculations. South West Agency