Economic Review – September 2018

Although the UK economy recently recorded its fastest rate of growth in almost a year, Brexit-related uncertainties continue to cast a shadow over future growth prospects.

The latest retail sales figures proved to be much stronger than analysts had been expecting as UK consumers continued their summer spending spree.

European markets had a volatile few days at the end of September, after the Italian government set a higher than expected budget deficit target, which is likely to trigger downgrades of Italy’s credit rating. In September, the eurozone’s annual rate of inflation rose further above the European Central Bank’s 2% target, with investors concerned the situation could lead to a breach of the EU’s budget limits.

The rate of inflation in the UK unexpectedly jumped to a six-month high in August, confounding economists and policymakers who were widely expecting price pressures to ease.

The latest set of employment statistics showed that the UK labour market remains in a particularly robust state and also revealed a recent pick-up in pay growth.