Economic Review – April 2018

UK government borrowing has fallen to its lowest level in more than a decade, a situation which may provide Chancellor Philip Hammond with scope to relax his tight grip on public spending.

A weaker economic backdrop and Brexit-related anxieties have significantly reduced the likelihood of a May interest rate rise, although most economists still expect rates to rise at some point during 2018.

April was a largely positive month, with many of the indices covered here registering solid gains. In the UK, the FTSE 100 gained over 450 points during the month to end April up 6.42% on 7,509.30 – its best monthly climb since July 2013 and its highest close since 31 January. The blue chip index was boosted at the end of the month by Sainsbury PLC shares, following the announcement of its merger with Walmart Inc.’s Asda Group Ltd. The weaker pound also contributed to the lift in the index, as its many multinational constituents generate most of their sales in foreign currencies. The FTSE 250 also closed the month in positive territory at 20,285.05, a monthly increase of 4.24%. The Junior AIM followed suit with a 3.76% gain to finish the month at 1,052.52.

UK retail sales suffered their worst performance in a year as consumers continued to struggle with the impact of rising prices and stagnant wages.

The UK economy stalled during the first quarter of 2018 with the rate of growth falling to a five-year low. Data released by the Office for National Statistics (ONS) suggests that UK gross domestic product (GDP) rose by just 0.1% in the three months to March 2018. This preliminary first quarter estimate was lower than the 0.4% growth recorded in the preceding quarter.