Economic Review – October 2018

Philip Hammond used his Autumn Budget Statement to declare: “the era of austerity is finally coming to an end”. However, while the Chancellor did certainly loosen the purse strings, his bold pronouncement may be a little premature.

The latest forecasts from the OBR released alongside the Autumn Budget Statement suggest that the UK economy is set for a period of relatively subdued growth over the next five years.

Stock markets rebounded on the last few days of the month, bringing some relief after a turbulent October. The unrest was fuelled by US trade tensions and worries about Italy, as well as concerns corporate earnings growth is peaking and ongoing global economic and Brexit-related uncertainties; all combining to weigh heavily on investor sentiment.

UK workers saw their basic pay grow at the fastest rate in nearly 10 years during the summer months although, when adjusted for inflation, earnings are still lower than before the financial crisis a decade ago.

A survey by the Confederation of British Industry (CBI) has reported a sharp fall in manufacturing new orders amid fears over the lack of clarity about how the UK will leave the EU.