Economic Review – July 2018

The UK economy picked up some momentum during the three months to May as the hot weather and royal wedding sparked a modest rebound from the lacklustre performance recorded in the early part of the year.

The rate of inflation in the UK remained unchanged in June, confounding a majority of economists who had predicted that a build-up in price pressures was set to push the figure higher.

The FTSE100 ended July on an upbeat note, rising by 1.46% over the month. This surge was fuelled in part by gains during afternoon trade that followed a report that the US and China may restart discussions aimed at resolving trade conflicts. Mining stocks on the FTSE100 leapt as China is a major buyer of industrial and precious metals, including copper. The basic materials and health care sectors led advancers, while the telecommunications and technology groups led decliners. The blue-chip gauge closed up 0.6% on the day at 7,748.76.

The latest official employment statistics show that the UK labour market remains in a robust state, with the proportion of people in work rising to yet another record high.

The UK government’s independent budget watchdog has painted a relatively bleak picture of the state of the country’s public finances over the longer term.

Updated projections of government finances over the next 50 years were recently published by the Office for Budget Responsibility (OBR) in its latest Fiscal Sustainability Report. And the forecasts suggest that public finances are set to come under significant pressure over the long term.