Economic Review – July 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

UK ECONOMY RECOVERING

Although recent data has confirmed that the UK economy is recovering from its coronavirus lockdown slump, the longer-term outlook (unsurprisingly) remains decidedly unclear.

RETAIL SALES BOUNCE BACK

The latest batch of retail sales statistics revealed grounds for cautious optimism, with official data reporting a sharp rebound in June’s overall figure and survey evidence pointing to further growth in July.

MARKETS

Many major global stock markets closed the month back in the red. Figures for the eurozone show the deepest contraction on record for the April to June period, with Spain’s economy shrinking by 18.5% in the second quarter. France’s economy has also been badly hit, seeing a Q2 fall in GDP of 13.8%. The US economy saw its worst quarterly plunge ever in Q2, shrinking at an annual rate of 32.9% as many businesses were shut down and unemployment surged to 14.9%.

INFLATION EDGES HIGHER

Official statistics have revealed that the UK’s headline rate of inflation rose slightly in June, although economists still expect an easing of price pressures over the next few months.

LABOUR MARKET FEARS

Although the latest set of employment data reported a slowdown in the number of UK job losses, economists have warned that this may simply be the calm before the storm.