Transcript Economic Update

Economic Update
Peter Andrews
Agency for Greater London
Bank of England
November 2011
Prospects for activity and inflation
Agency for Greater London
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
Agency for Greater London
Chart 1.1 Bank Rate and forward market interest rates
Agency for Greater London
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
Agency for Greater London
Euro area developments and risks
• Extreme outcomes excluded from fan charts
• But projections capture risks already reflected
in:
– Asset prices
– Bank funding costs
– Confidence
Agency for Greater London
Money and asset prices
Agency for Greater London
Chart 1.3 Selected European ten-year spot
government bond yields
Agency for Greater London
Chart 1.8 UK banks’ longer-term funding spreads
Agency for Greater London
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.
Agency for Greater London
Chart 1.10 Loans to UK businesses by size
Agency for Greater London
Corporate credit availability by firm size
Credit Conditions Survey, Oct 2011
Agency for Greater London
Household secured credit availability(a)
Agency for Greater London
RICS: regional house prices over past 3 months
Agency for Greater London
Demand, output, capacity and employment
Agency for Greater London
Chart B Net trade as a percentage of GDP(a)
(a) Chained-volume measures. Excluding the estimated impact of MTIC fraud.
Agency for Greater London
Chart 2.11 Household consumption and real income
Agency for Greater London
Chart 2.9 Contributions of expenditure components
to changes in demand in recessions and recoveries
Agency for Greater London
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.
Agency for Greater London
Agents’ construction scores
Agency for Greater London
Chart 3.8 Labour productivity Chart 3.9 Survey measures of
capacity utilisation
Agency for Greater London
Chart 3.4 Public and private sector employment
Agency for Greater London
Change in LFS unemployment rate (three months to August
2011 compared with three months to August 2010)
Agency for Greater London
Costs and prices
Agency for Greater London
Chart 4.2 Direct contribution of energy prices to CPI inflation
and Bank staff’s central estimate of VAT contribution
Agency for Greater London
Chart 4.5 Dollar oil and industrial metals prices
Agency for Greater London
Chart 4.8 Measures of domestically generated inflation
Agency for Greater London
Economic Update
Peter Andrews
Agency for Greater London
Bank of England
November 2011