In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest economic developments in the UK.   

  • The housing market is continuing to strengthen, but talk of "bubbles" is premature. Outside London, house price increases have been quite modest. 
  • Mortgage approvals and residential property transactions are both picking up, but still well below the activity levels recorded prior to the recession.
  • The latest Markit PMI surveys for manufacturing and construction were positive. Concerning manufacturing the UK reading was more buoyant than those for the Eurozone countries surveyed by Markit. And within construction residential activity remained the fastest growing area of construction, another sign of the strengthening housing market.
  • Mortgage lending is picking up slowly, but the rate should accelerate as recent mortgage approvals translate into loans. Unsecured lending is now growing quite strongly, supporting consumer spending. Lending to the business sector is, however, still falling.
  • The labour market continues to improve and CPI inflation was just 2.1% in November. But the external sector continues to disappoint, with exports constrained by sluggish activity in the Eurozone.     
  • London's increasing economic lead over the rest of the country. The capital now accounts for over one fifth of UK gross value added (GVA). 
  • The upcoming MPC meeting, at which no changes in policy are expected.     

Ruth Lea said, "The UK economy continues to improve. Granted growth to date has been "unbalanced" in that it has been led by domestic rather than external demand. The much desired "rebalancing" is not taking place. But growth is growth. And it is generating jobs. The UK looks set to be one of the fastest growing developed economies this year.


Press enquiries:

Arbuthnot Banking Group PLC: 

Ruth Lea, Economic Adviser 

07800 608 674, 020 8346 3482, ruthlea@arbuthnot.co.uk 

Follow Ruth on Twitter @RuthLeaEcon 

David Marshall, Director of Communications  

020 7012 2432, 07502 285 835, davidmarshall@arbuthnot.co.uk

Pelham Bell Pottinger: 

Dan de Belder 

020 7337 1548, ddebelder@bell-pottinger.co.uk

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