Economic Review – September 2019

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

RECESSION FEARS EASE

The latest gross domestic product (GDP) statistics showed the economy grew more strongly than expected in July, significantly easing fears that the UK was on the verge of slipping into recession.

INFLATION DROPS TO TWO-YEAR LOW

Weak computer game and clothing prices resulted in the headline rate of inflation slowing sharply in August, a move which appears to reduce any pressure on the BoE to tighten monetary policy in the short-term.

MARKETS

In September, the main global indices bounced back following losses in August. The month finished much as it began, with trade uncertainty between the US and China continuing to weigh on business and market sentiment. Markets were more optimistic after Steven Mnuchin, US Treasury Secretary announced that he and US Trade Representative Robert Lighthizer would meet with Chinese Vice Premier Liu He for trade talks in October.

GOVERNMENT FINANCES WEAKEN

The latest batch of public sector borrowing figures highlights a deterioration in UK government finances, placing Chancellor Sajid Javid under pressure to relax current fiscal rules if the government is to fulfill recently announced spending pledges.

BREXIT ENDGAME?

The past month has again seen numerous political twists and turns in the Brexit process and as we enter the final month before the second deadline, it remains decidedly unclear how Brexit will ultimately play out.