Economic Review – April 2020

Our monthly economic review is intended to provide background to recent developments in investment markets as well as to give an indication of how some key issues could impact in the future.

Overview

INFLATION SET FOR FURTHER FALLS

The headline rate of inflation in the UK fell in March with economists expecting a continuation of this downward trend over the coming months.

UK BRACED FOR RECORD SLUMP WITH A BOUNCE BACK EXPECTED

According to survey data the UK economy suffered its largest contraction on record last month, while a Bank of England (BoE) official has warned the pandemic lockdown is pushing the country into the worst slump for centuries.

MARKETS

At the end of April, several major global markets closed the month in positive territory. On the last trading day of the month, Europe’s largest markets lost most of the healthy gains accrued the previous day, as cautious statements from economists and central banks weighed on sentiment.

WELFARE CLAIMS RISE SHARPLY

A large increase in benefit claims due to the pandemic lockdown points to an imminent jump in unemployment, with government budget forecasters suggesting the rate could more than double before falling back later in the year.

RETAIL SALES IN DECLINE

Official data shows that UK retail sales recorded their steepest ever monthly decline, as a sharp rise in food sales due to the lockdown failed to offset a dramatic fall in sales of clothing and most other goods.