The UK: Economy & Markets

[Uncle Festivus]

For all things about the UK economy & equity markets.

The FTSE is looking good at the moment, despite the 'unexpected' recent data that suggests a worsening economy, or at best, just flatlining?

LONDON (MarketWatch) ”” Activity in Britain’s services sector saw a marginal but unexpected contraction in December, with business hit by poor weather as well as an overall decline in demand, according to a closely-watched, monthly survey of purchasing managers released Thursday.

The Markit/CIPS purchasing managers index for the services sector fell to 49.7 from a reading of 53.0 in November. Economists had forecast a more modest decline to 52.5.

A reading of less than 50 indicates activity fell, while a reading of more than 50 indicates growth.

http://www.marketwatch.com/story/british-services-activity-unexpectedly-shrinks-2011-01-06

Marginal? An outright contraction more like it! Tell it how it is MW?

The reading on the services sector, the largest component of the British economy, follows data earlier this week on manufacturing and construction.

So the largest component of the British economy contracts substantially to contraction and the market goes up another 50 points?

A gauge of construction fell in December to 49.1 from 51.8 the previous month, CIPS and Markit said yesterday. An index of manufacturing rose to 58.3, the highest in 16 years, from 57.5 in November as the weaker pound helped drive export orders, the groups said Jan. 5.

VAT has also gone up to 20% as from Jan 1, so the already worse-than-expected retail figures for Dec had the benefit of a last ditched splurge from shoppers wanting to avoid the higher tax.

Public sector employees also face the start of the governments austerity drive to contain costs by joining the unemployed que.

UK National Debt - how Britain owes over £900 billion

The Government forecasts it will soar to an eye-watering £1.1 trillion by 2011. To put that in perspective, the UK went bust in 1976 running a budget deficit of 6% of GDP. In 2010 that deficit is going to top 11%.

Somethings gonna give .................sooner or later?

 

[tothemax6]

Can someone tell me what the UK actually produces again? I think I have only seen one thing recently (a valve) that said 'Made in England'. I'm not being disparaging, I just don't know where their money comes from.

 

[Wysiwyg]

VAT has also gone up to 20% as from Jan 1, so the already worse-than-expected retail figures for Dec had the benefit of a last ditched splurge from shoppers wanting to avoid the higher tax.

Public sector employees also face the start of the governments austerity drive to contain costs by joining the unemployed que.



Somethings gonna give .................sooner or later?

Wonder what a flourishing economy will look like? Overdue for a correction in my opinion but the markets more often than not defy anticipation.

 

[Uncle Festivus]

Did somebody say Stagflation?

Fears are growing that the UK is running the risk of a period of painful "stagflation", as official figures should this week show that growth continued to slow down in the final three months of 2010.

Analysts think the economy is already showing symptoms of stagflation – the toxic cocktail of stagnating growth and rising prices that leaves policymakers unable to tackle one problem without making the other worse. Households suffer, as the weak labour market means wages do not keep pace with wider price rises in the economy.

Story

Not only slowed but reversed......

Britain’s economy unexpectedly shrank the most in more than a year in the fourth quarter as construction slumped and the coldest December in a century hampered services and retailing.

Gross domestic product fell 0.5 percent after increasing 0.7 percent in the previous quarter, the Office for National Statistics said in London today.

Story

Double-dip talk returns as UK economic growth slows

The number of British companies in financial distress has risen for the first time since the beginning of 2009, in a statistic that will drive fears that Britain could be entering a double-dip recession.

Almost 148,000 companies are in difficulties before the the full impact of spending cuts and tax rises has even been felt, according to a report from Begbies Traynor, the insolvency specialist.

Story

So the UK is just a quarter away from recession, again, and the FTSE shrugs it off, again?

 

[Uncle Festivus]

Did somebody say 'double dip'?

The UK economy has returned to recession, after shrinking by 0.2% in the first three months of 2012. A sharp fall in construction output was behind the surprise contraction, the Office for National Statistics said.



Just don't tell 'the market'.......

 

[noirua]

The UK Government last week defended its record of providing £80billion in job support to businesses during the pandemic, disputing the £4.3billion figure, while acknowledging some fraud had occurred.
However on Monday, Theodore Agnew, a Tory who sits in the House of Lords, said he was resigning as a junior minister in the Treasury and Cabinet Office departments.
28 January 2022
Part of his role included oversight of spending and reducing fraud, citing "schoolboy errors".

MSN

www.msn.com

 

[Garpal Gumnut]

The UK Government last week defended its record of providing £80billion in job support to businesses during the pandemic, disputing the £4.3billion figure, while acknowledging some fraud had occurred.
However on Monday, Theodore Agnew, a Tory who sits in the House of Lords, said he was resigning as a junior minister in the Treasury and Cabinet Office departments.
28 January 2022
Part of his role included oversight of spending and reducing fraud, citing "schoolboy errors".

MSN

www.msn.com

I believe that rising energy prices and inflation will dog the UK on top of the National Debt which face all countries since Covid.

gg

 

[noirua]

I believe that rising energy prices and inflation will dog the UK on top of the National Debt which face all countries since Covid.

gg

The United Kingdom National Debt Clock 2025 Counter >> nationaldebtclock.co.uk

The Great Kingdom UK national debt grows at a rate of 45.486 pond per second! Watch the live debt clock 2025. Watch it live...

www.nationaldebtclock.co.uk

Australian Debt Clock

australiandebtclock.com.au

Compteur de la dette publique française pour 2025 Dette publique par ménage de la France » Dettepublique.fr

Qu'est ce que la dette publique de la France? La France s'endette de euros de plus chaque seconde.

www.dettepublique.fr

The US National Debt Clock 2025 Counter >> theusdebtclock.com

The U.S. national debt grows at a rate of 45.486 dollar per second! Watch the live debt clock 2025. Watch it live...

www.theusdebtclock.com

 

[Dona Ferentes]

I believe that rising energy prices and inflation will dog the UK on top of the National Debt which face all countries since Covid.

gg

and toss in a bit of incompetence

The UK, with a new PM, has got itself in a pickle. .... high sensitivity to risk assets (which should weaken as the Fed tightens financial conditions), exposure to European stagflation and the energy shock, and external imbalances. And now POLICY misstep.

As UK bonds extended their losses, with the yield on the UK 10-year note up 26 basis points to 4.50% on Tuesday (or about 140 basis points higher than on 16 September) and the pound holds recent lows at US$1.07, hedge fund billionaire Ray Dalio lashed out at the government’s plan for a debt-funded tax-cutting spree.

In a series of tweets, Dalio said both investors and policymakers should “heed the lesson of the UK’s policy blunder."

“The panic selling you are now seeing that is leading to the plunge of UK bonds, currency, and financial assets is due to the recognition that the big supply of debt that will have to be sold by the government is much too much for the demand.

“That makes people want to get out of the debt and currency. I can’t understand how those who were behind this move didn’t understand that. It suggests incompetence.

“Mechanistically, the UK government is operating like the government of an emerging country ... it is producing too much debt in a currency that there is not a big world demand for....

 

[Dona Ferentes]

And now it seem the the BoE is doing its own version of "whatever it takes" , which has energised markets (again). But will it succeed, acting on its own? And are these actions sustainable?

The Bank has set off a buying spree for long-dated UK sovereign bonds to prevent tumbling prices from triggering a potential financial crisis. The BoE said it had to combat the bond market’s “dysfunction”, to avoid “a material risk to UK financial stability” that could stifle credit flows into the real economy......

.......... and and it seems to be aimed to propping up (defined benefit) pension funds that hold liability-driven investment funds (LDIs) that are (guess what?) geared. Highly leveraged.

A week ago, 10 years (Gilts) were under 3.4%, they soared to 4.5%pa, and now have dropped to 4.1%pa following the BoE buying. But the 20- and 30- year Bonds have been left without a market, as you'd expect.

The BoE’s bond-buying program is expected to last until October 14 and “will be unwound in a smooth and orderly fashion once risks to market functioning are judged to have subsided”.

Where have we heard that before?

Messy. Look for LDIs to replace CDOs in the future narratives?

 

[Knobby22]

I remember when the Conservative Party was conservative.

 

[sptrawler]

Where's Boris when you need him. ?
There's a reason 60% of conservatives wanted him to stay and the media wanted him to go, it wont be long now and there will be a change of government in the U.K.
The West will implode from within, the way they are going.
The U.K, U.S, Germany, France, NZ and Aust are stating to look like that car sticker, "Don't follow me, I'm lost". ?

 

[divs4ever]

Where's Boris when you need him. ?
There's a reason 60% of conservatives wanted him to stay and the media wanted him to go, it wont be long now and there will be a change of government in the U.K.
The West will implode from within, the way they are going.
The U.K, U.S, Germany, France, NZ and Aust are stating to look like that car sticker, "Don't follow me, I'm lost". ?

as long as that UK leader is Farage the UK has a tiny chance , otherwise the UK will sink into a swamp of mediocrity

the current Labour is a lost cause as well

 

[sptrawler]

as long as that UK leader is Farage the UK has a tiny chance , otherwise the UK will sink into a swamp of mediocrity

the current Labour is a lost cause as well

Yes the media induced political turmoil has certainly had the desired effect, chaos makes the media job easy. The media doing what it does best, flipping Governments.

https://www.dailytelegraph.com.au/news/world/uk-pm-liz-truss-holds-crisis-meeting-as-economy-tanks-and-shock-poll-puts-her-33-points-behind/news-story/762418bea02df944715dd9bcfa7055a1

UK Prime Minister Liz Truss held crisis talks on Friday as the British economy continues to take a beating following her disastrous mini-Budget.
The PM - who has only been in the job for a matter of weeks - has presided over one of the worst financial collapses in recent British history after her new fiscal measures sparked market chaos.

The Pound plummeted to a record low of $1.03, but has now rallied to nearer $1.11.

A shock YouGov poll on Thursday night put her Conservative Party an astonishing 33 points behind the opposition, Labour. If reflected at a General Election, that would cause a landslide win for Labour.

 

[divs4ever]

but that same Labour Party had no alternative policies to win against BoJo , this is just BoJo with a skirt ( she doesn't even have a philandering problem or a drinking problem )

one thing to watch MIGHT be the break-up of the United Kingdom

 

[IFocus]

I remember when the Conservative Party was conservative.

Seems to be a world wide problem along with conservative moderates going missing or remaining silent.

 

[divs4ever]

time will tell , but it is obvious in the developed nations , i have been pleasantly surprised by examples of rational behaviour in some African nations ( unfortunately some those have died prematurely )

but yes , nationalist is being labelled as racist and/or fascist but that's OK , wait until the snowflakes , need unity and loyalty ( karma will bite hard )

 

[Smurf1976]

Seems to be a world wide problem along with conservative moderates going missing or remaining silent.

Rather a lot of the UK and indeed Western problems are really just the inevitable consequences of what was politely termed “economic rationalism”.

That’s what scrapped energy planning throughout the West and it’s the same reason there’s a shortage of tradespeople.

Short term thinking at its worst.

 

[orr]

Rather a lot of the UK and indeed Western problems are really just the inevitable consequences of what was politely termed “economic rationalism”.

That’s what scrapped energy planning throughout the West and it’s the same reason there’s a shortage of tradespeople.

Short term thinking at its worst.

No one can say that they weren't warned.
For those unfamiliar see the authors of 'Britiania Unchained'Global Lessons for Growth and Prosperity ....

And Nothing Jello Biafra & 'the Dead Kennedy's' weren't warning about 40+ odd years ago

 

[sptrawler]

Rather a lot of the UK and indeed Western problems are really just the inevitable consequences of what was politely termed “economic rationalism”.

That’s what scrapped energy planning throughout the West and it’s the same reason there’s a shortage of tradespeople.

Short term thinking at its worst.

Yes the 1980's-90's push to globalism and outsourcing, get competitive or go broke, most went broke and those that didn't were supplying an essential service that the various governments couldn't afford to let go broke.