UK Economy

Some economists say a widely monitored private sector survey is an indication that UK inflation could fall notably further by year-end, leading the Bank of England (BoE) to "pause" its interest rate cycle soon, but the broader implication is that the BoE may already 'overtightened' and could need to consider cutting borrowing costs in the near future.

Economists say although the prospect of a second consecutive 50 basis point rate hike in August has greatly receded following softer-than-expected June inflation figures, an elevated services inflation gives the Bank of England cause to hike on at least two more occasions.

Good news for households and businesses as UK inflation came in well below expectation in June, but for the British Pound the slowdown in price rises could spell weakness.

Some economists are forecasting UK economic growth to pick up through the remainder of 2023, although others warn of a recession taking hold as higher interest rates begin to bite.

The UK economy outperformed expectations for the month of May when an additional public holiday connected with the King's Coronation had less of a negative impact than many envisaged though was still enough to leave output little changed for the second quarter at the midway milestone. 

Pound to Euro rate rises to 1.17 in the immediate aftermath of the UK labour market release while the Pound to Dollar exchange rate goes to a new 2023 best at 1.2899.

A key Bank of England yardstick used to ascertain domestic inflationary pressures confirms UK wage inflation remains resolutely sticky, casting doubts on the Bank's ability to bring inflation back to 2.0% in the medium term.

According to the Lloyds Bank Business Barometer, businesses haven't been this chipper since last May as they report a 9ppt improvement in sentiment.

The Great British public has "stepped up remarkably" in funding government borrowing shows a new analysis from Deutsche Bank.

Berenberg says UK to avoid a recession, Pantheon Macroeconomics says mortgage hit to be contained, but Capital Economics still reckons recession is likely.

The UK economy continued to slow in June according to a survey that also revealed significant inflationary pressures remain embedded in the economy.

UK retail sales unexpectedly rose by 0.3% in May according to ONS data released ahead of the weekend.

The Bank of England has had a "crossing the rubicon" moment and will hike interest rates by a further 100 basis points before the year is done says NatWest Markets.

There was some good news contained in the tranche of inflation data released midweek: the price pressure pipeline is weakening as UK manufacturers see falling costs.

Pound Sterling faces a key test in the form of the UK inflation release on Wednesday, June 21 as the figures will have a sizeable impact on the future of UK interest rate policy at the Bank of England.

The British Pound's initial reaction was to go higher following the release of a UK labour report that roundly trounced analyst expectations and suggested the UK would continue to see elevated inflation levels as a result of elevated wage settlements.

Capital Economics has reviewed its mortgage forecasts and can reveal the hit to borrowers posed by a higher Bank of England base rate is likely to be "more severe" than initially anticipated with some facing a 50% jump in mortgage rates over the coming months.

The consensus was too gloomy on the UK's economic prospects entering 2023, but one investment bank now accuses economists of being too benign on the prospects of a recession later in the year.

UK house prices are forecast to fall further with one economist saying a near-10% decline can be expected from here.

One of the UK's largest high street lenders says the recent rise in UK core inflation in April represents a "game-changer" moment for UK interest rates and the broader economic outlook.