Economic Review – March 2017

“We are leaving the European Union, but we are not leaving Europe and we want to remain committed partners and allies to our friends across the continent.”  With these words, the Prime Minister of the United Kingdom, Theresa May, signed off her letter to the European Union (EU) Council President Donald Tusk.

Inflation in the UK, as measured by the Consumer Prices Index (CPI), soared to 2.3% in February, according to the latest figures released by the Office for National Statistics (ONS). This leap from the previous month’s 1.8% is the highest level seen since September 2013 and pushes the rate above the Bank of England’s (BoE) target rate of 2%. The BoE has said that it expects the CPI rate to rise to 2.8% by 2018, although many independent analysts believe that even this figure could be exceeded.

March saw most of the global equity markets maintain their bullish stance, despite the UK Government signing and delivering Article 50 that officially gave notice of leaving the European Union (EU).

The FTSE100 registered no less than three all-time highs in the month to top out at 7,429.81 late month, before drifting off a little to finish at 7,322.92, for a modest gain of 0.82% in the month, but still 2.52% higher since the turn of the year.

In a vote of confidence in the resilience of the UK’ s economy post the Brexit vote, the State of Qatar, already a very large investor in the country (with up to £40bn committed in infrastructure projects, real estate and residential property) has announced a further commitment of £5bn over the next three to five years for strategic infrastructure a nd real estate investment in the UK.

Retail sales in the UK rose in February by 1.4%, according to the latest data released from the ONS. This is an improvement from the 0.4% average forecast made by many economists. However, the volume of sales fell by 1.4%.