Economic Review – September 2017

The Bank of England (BoE) has signalled that the UK’s first interest rate hike in more than a decade may be fast approaching.

An unexpected boost to the public finances in August could provide Chancellor Philip Hammond with a degree of wriggle room when he publishes his Autumn Budget on 22 November.

Global equity markets were largely positive on the last day of the quarter. Two US indices, the Nasdaq and S&P500 reached all-time highs in September as positive investor sentiment over economic growth and expectations of robust third-quarter corporate earnings prevailed. The Dow Jones gained over 435 points (1.98%) in the month, to close at 22,387.86, whilst the Nasdaq saw a 1.05% gain to close the month at 6,495.96.

The BoE has warned banks that they are underestimating the risks posed by the surge in consumer borrowing and the hit they would take from debt default during an economic downturn.

The UK labour market continues to defy traditional economic theory with real wages still stagnating despite record levels of employment.