The briefings provide an easy-to-use commentary on the key economic indicators for UK businesses. The reports also provides a comparison between the economic data compiled by external organisations such as the Office for National Statistics (ONS) and the BCC’s own Quarterly Economic Survey and economic forecast.
Economic updates will be uploaded here and appropriate links provided.
March 21 2018
BCC comments on labour market statistics March 2018
Commenting on the labour market figures for March 2018, published today by the ONS, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:
“The strong rise in employment, together with the unemployment rate dropping back to 4.3%, confirms that the labour market remains a major bright spot for the UK economy.
“The pick-up in wage growth is welcome, and coupled with slowing inflation, means that the squeeze on household spending is easing. While regular real wage growth is now likely return to positive territory sooner rather than later, the extent to which pay growth can be kept sustainably above price growth will largely be determined by the UK’s ability to deliver sustainable increases in productivity. Notably, the rise in wage growth also increases the likelihood of an interest rate rise this year.
“It is concerning that the number of vacancies remains at a record high, a further indication of the chronic skills shortage. This mirrors the BCC’s quarterly economic survey, which confirms that recruitment difficulties for UK firms are at historically high levels.
“More must be done to support firms looking to recruit and grow their business, including easing upfront business costs and delivering a future immigration regime that supports the needs of the UK economy.”
March 20 2018
BCC comments on inflation figures for February 2018
Head of Economics Suren Thiru comments on the fall in inflation to 2.7%.
The drop-in price growth in February was more than expected and supports our view that inflation remains on a downward trajectory. The largest downward pressure on inflation in the month came from transport and food prices, which rose by less than a year ago.
It is increasingly likely that the UK is now past the peak of the recent spike in inflation, and price growth will ease further over the coming months as the impact of the post-EU referendum decline in sterling drops out of the calculation. However, upward pressure from rising global commodity prices could well mean that it will be some time before inflation returns to the Bank of England’s 2% target.
Nonetheless, with the latest inflation data suggesting that underlying price pressures are weakening, this should give the Bank of England sufficient scope to shift its focus a little from tackling inflation to supporting a weakening economy. While the prospect of a single rise in interest rates this year remains on the table, the probability of multiple rate hikes looks unlikely at this stage.
With economic conditions likely to become more subdued, the MPC should opt for a prolonged period of monetary stability and keep interest rates steady over the near term. More also needs to be done to boost business investment, including tackling the high upfront cost of doing business in the UK.