Economic Review – February 2018

The Bank of England (BoE) has indicated that interest rates are set to rise sooner and by a greater extent than it previously anticipated.

Although pay growth remains modest and is still lagging behind the rate of inflation, there is evidence that workers could be in line for bigger wage rises.

As temperatures dipped at the end of the month, so too did the markets. In the UK, the FTSE100 lost over 50 points on the last day of trading to end February down 4.0% on 7,231.91 – a recovery from its mid-month low of 7,092.43 on 9 February. On the last day of the month, the index fell in early trade following comments from the new chair of  the US Federal Reserve, Jerome Powell, outlining his expectation for further gradual interest rate hikes over the coming year.

UK public borrowing for the year to date stands at its lowest level since the financial crisis, a situation which should ultimately provide Chancellor Philip Hammond with a welcome windfall.

The second half of 2017 saw the UK economy record its strongest consecutive quarters of productivity growth since the 2008 financial crisis.