Economic review

Our members and their customers are integral parts of the UK economy.  How customers use financial products and manage their money depends on a wide range of economic indicators, through wages, housing, employment, cost of finance, savings, consumer spending, business funding and investment, inflation, the value of sterling and a host of other factors.  Summarising trends in economic indicators helps to contextualise and understand the drivers of financial behaviour, so we provide economics research to complement the industry data and research compiled by UK Finance.

Latest Economic Review

November saw inflation fall slightly to 2.3 per cent, reducing the likelihood of a Bank Rate rise from 0.75 per cent. Consumers remain wary of their day-to-day finances with sentiment falling to its lowest for eleven months even with higher employment and real wage growth. The alternative measure of inflation containing owner-occupiers' housing costs - owning, maintaining and living in one's own home and Council Tax (CPIH, 2.2 per cent) shows that utility bills have become the largest contributor to the housing component of the index, reflecting lower disposable income.

The new monthly GDP figures showed growth of 0.6 per cent in the three months to September, with the services sector the largest contributor (0.4 per cent), followed by construction (0.13 per cent). Quarter 3 saw an increase in growth driven by the manufacture of transport equipment businesses as more goods were exported.

The UK business landscape continues to show uncertainty around the Brexit negotiations. After three consecutive quarterly increases in 2017, business investment has stalled in 2018 with three consecutive quarterly falls, the first time this has happened since the economic downturn of 2008 to 2009. In quarter 3 it was 1.2 per cent lower than in quarter 2. Expenditure on transport equipment and ICT was the largest negative contributions.

Economic Update December 2018

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