Economic Review – February 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

THINK-TANKS ISSUE BUDGET WARNING

The new Chancellor has been warned he will either need to increase taxes or break the government’s borrowing rules when he delivers the country’s first post-Brexit Budget on Wednesday 11 March.

CORONAVIRUS DENTS RECOVERY HOPES

Data released by ONS has confirmed the UK economy stalled in the final quarter of 2019 and the economic fallout from the coronavirus outbreak looks set to hinder prospects of an imminent recovery.

MARKETS

As February ended, markets completed a seven-day losing streak, the worst since the 2008 financial crisis. Several major global indices fell as panic selling relating to the escalating coronavirus outbreak prevailed. On 28 February, the World Health Organization upgraded the global risk of the coronavirus outbreak to ‘very high’ but said that it had not seen evidence that the virus was spreading freely enough for it to be a pandemic.

PAY BACK AT PRE-CRASH LEVELS

The latest batch of labour market statistics shows that the average UK weekly wage has now finally risen back to pre-financial crisis levels.

INFLATION AT SIX-MONTH HIGH

Official data has revealed that the headline rate of inflation in the UK has unexpectedly risen to a six month high largely as a result of higher fuel prices and a smaller-than-usual drop in airfares.