Economic Review – March 2018

Although interest rates were left on hold following the Monetary Policy Committee (MPC) meeting on 22 March, a split vote appearst o have paved the way for a rate hike at the next meeting in May.

An independent think-tank has warned the Chancellor that he will need to raise taxes significantly if the government wants to keep spending constant and maintain a commitment to balance the books by 2025.

At the end of the month, major European and US markets were closed on Friday for the Easter holiday weekend. In the UK, the FTSE 100 index had a mixed month with 11 positive closes and 10 negative in March. The blue chip index ended March down 175.30 points at 7,056.61, a loss of 2.42% on the month. The index closed its worst quarter since 2011, hindered by a series of profit warnings and problems in the outsourcing and retail sectors as Brexit uncertainty continues to weigh. The FTSE 250 closed down 226.80 points at 19,460.47, a loss of 1.15%. While, the junior AIM also closed in negative territory, ending the month down 23.97 points or 2.31% at 1,014.35.

A decline in the rate of inflation along with increasing wage growth has boosted  hopes that an end to the squeeze on household incomes may be in sight.

The rate of inflation in the UK fell to a seven-month low in February as the impact of sterling’s depreciation in the aftermath of the EU referendum starts to fade.