Economic Review – May 2018

Updated Bank of England (BoE) forecasts suggest the UK economy is set to bounce back in the second quarter of 2018, despite continuing signs of waning consumer sentiment.

Data from the latest offi cial labour market statistics showed that the number of people in work rose by 197,000 during the three months to March 2018. This left the employment rate (the proportion of 16–64 year-olds who are in work) at 75.6%, the highest fi gure since records began in 1971.

The last week of May was a week of two halves. It kicked off with rising political uncertainty in Italy and growing trade tensions, which weighed on markets. As the week progressed, global shares rallied on the back of positive Chinese data and signs that Italy may avoid imminent elections.

The rate of inflation in the UK unexpectedly fell to a 13-month low in April continuing the downward trend that has been evident for the last few months.

The BoE Governor, Mark Carney, has warned that a “disorderly” Brexit could delay any further tightening of monetary policy and even result in rates being cut.