Janet Mui: weekly economic update 15 March
In this Weekly Economic Update, our economist Janet Mui discusses the latest Brexit developments, the UK’s Spring Statement and US economic data.
Soft Brexit looking more likely but continued uncertainty to weigh on growth
The UK parliament is looking to delay Brexit until 30th June to allow time to reach an agreed withdrawal deal. The chances of a “soft” Brexit are looking higher but delay and continued uncertainty are likely to weigh on economic growth.
Spring Statement: lower growth but improved fiscal position
The UK’s Office of Budget Responsibility downgraded its forecast of 2019 UK growth to 1.2%. However, the fiscal situation has improved due to higher tax revenues and lower borrowing costs. This provides the government with more fiscal headroom to support the economy through Brexit.
Rebound in US activity with modest inflation
US retail sales bounced back in January after the stock market sell-off and government shutdown hurt spending in December. Meanwhile, inflation slowed. US real wages are now growing at a cycle-high of 1.9%, supporting our belief that US consumption will remain robust.