UK economy 'shrinking' as factories and services companies struggle - business live - The Guardian, Theguardian.com

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Rupert Harrisonof (BlackRock) **************** (a former top Treasury official) predicts better times ahead for the UK economy:

Rupert Harrison(@ rbrharrison)

FTSE is on a tear today. Global investors have been underweight the UK since 2019, now reallocating back given hugely reduced uncertainty

I suspect the same reduction in uncertainty will unleash some corporate investment and boost the real economy , despite poor PMIs today

pic.twitter.com/Q6bN5H0F7I

December (************************************************************************************************************************************************************************************************************************************************************************************************************************, **********************************************************************************************************************************************************************************************************************

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OBR revises up UK borrowing by £ 100 bn

In another blow, Britain’s fiscal watchdog has revised up its forecasts for government borrowing.

The deficit will be roughly £ bn higher per annum over the next five years, the Office for Budget Responsibility has calculated.

This is largely due to “a new accounting treatment for student loans and a material correction to corporation tax receipts,” and is meant to give a better picture of the UK public finances.

The OBR says:

********************************

We have restated our March 2016 borrowing forecast to include recent ONS statistical changes but have not incorporated any other new data, new judgements nor include an update to the economy forecast.

After incorporating these changes, borrowing has increased materially by around £ bn each year.

This means the 2019 – 22 deficit is now expected to hit £ bn, not £ (*************************************************************************************************************************************************************************************************************************************************************************************************************. 7bn expected. In – 21 it is seen at £ 35 .9bn, not £ 21. 9bn.

So effectively, an extra £ bn of borrowing over the next five years!
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Torsten Bell(@ TorstenBell)(Borrowing is revised up by £) ******************************************************************************************************************************************************************************************************************************************************************************************************************** bn a year by@ OBR_UK– should remind returning ministers that economic outlook isn’t as rosy as their political one. Slow global growth and a tiny margin for error against the brand new fiscal rules mean tax rises are more likely than tax cuts

pic.twitter.com/QtrspVXocQ (December) **********************************************************************************************************************************************************************************************************************************************************************************************************************, ************************************************************************************************************************************************************************************************

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********************************** Britain’s economic weaknesscould prompt the Bank of England to cut interest rates soon, suggests Capital Economics.

They told clients that borrowing costs could be lowered, from 0. (****************************************************************************************************************************************************************************************************************************************************************************%, early in if the PMIs don’t improve.

********************************

The weak flash PMIs for the UK are another piece of evidence that suggests growth flat-lined in Q4. And if there isn’t a pick-up in the surveys in the next few months, then the MPC may respond by cutting interest rates.

By then, the BoE could have a new governor, with Mark Carney due to depart on January. ************

A decision is expected imminently. Former deputy governor Minouche Shafik is seen as a front-runner, with former US Federal Reserve official Kevin Warsh emerging as a surprise late contender …

******************************** (Reuters UK)(@ ReutersUK)

Factbox: Britain set to announce next Bank of England governorhttps://t.co/OapaEh9gC9 pic.twitter.com/SKqtnQnlYN (December) ************************************************************************************************************************************************************************************************************************************************************************************************************************,**********************

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Howard Archerof (EY Item Clubsuspects that the UK’s PMI readings may improve, now the election is over.

Howard Archer(@ HowardArcherUK)Needs to be borne in mind that December flash

# UK# PMI‘s were carried out at a time of particularly heightened uncertainty – run-up to General Election. Also bear in mind that November “flash” PMIs were revised up appreciably for both# services& (# manufacturing https://t.co/PJW7RIIIeR

********** , 2020

UK businesses have been pleading for some political certainty for months.

Boris Johnson’s election triumph certainly provides some (although it’s far from clear how he’ll secure a new EU trade deal by December 5240. ************

(******************************************************************************** 5 ************************************************************************************************************************************************************************************************************************************************************************************************** (am) ******** (EST****************************************************************************************************************************************************************************************************************************************************************************************************************************:

Markit’s PMI surveys are based on interviews with managers at companies across the world economy.

This makes them more timely than official GDP data, and a handy gauge to sentiment in the economy. However, they don’t always match up with the growth statistics, and can be more negative if bosses are most anxious.

Dharshini David(@ DharshiniDavid)PMIs point to output / GDP shrinking 0.2% in Q4 BUT have been overly pessimistic … gulf suggests these surveys might be more indicative of investment activity (still dismal) than output (December) ***************************************************************************************************************************************************************************************************************************************************************************************************************************, 5112******************************************************************************************Rupert Seggins(@ Rupert_Seggins)(Preliminary estimate of UK PMI painting a pretty gloomy picture in Q4, falling from 55. 3 in Nov to (**************************************************************************************************************************************************************************************************************************************************************************************************. 5 in Dec. Will be interesting to see if this is matched in the official GDP growth stats, as PMI has not matched up v. well of late. Manufacturing fell to 4 & services to (4. ******************************************************************************************************************************************************************************************************************************************************************************************** 0pic.twitter.com/7fq0xy7V9u (December) **************************************************************************************************************************************************************************************************************************************************************************************************************************, **********************

(************************************************************************************************** (5.) ********************************************************************************************************************************************************************************************************************************************************************************************************************** amEST(**********************************************************************************************************************************************************************************************************************************************************************************************************************************: **************************************************************************************************************************************************************************************************************************************************************************************************************************

There’s quite a contrast between UK economic activity in December (down down down), and the UK stock market (up up up)

IHS Markit PMI ™(@ IHSMarkitPMI)(Flash UK Composite Output PMI falls to near three-and-a-half-year low in December) 5.

************************************************************************************************************************************************************************************************************************************************************************. 3 – Nov). Notably, manufacturing output fell at a rate exceeded only once since the global financial crisis, while services recorded back-to-back declines. More:

https://t.co/RX2gmqqyuW

pic.twitter.com/Nk3mzG7N (December) ************************************************************************************************************************************************************************************************************************************************************************************************************************, ******************************************************************************************************

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The FTSE Photograph: Refinitiv

(5.) **************************************************************************************************************************************************************************************************************************************************************************************************************************** am EST************************************************************************************************************************************************************************************************************************************************************************************************************************************:

The City has responded to the grim PMI surveyby ….. driving shares even higher.

The FTSE********************************************************************************************************************************************************************************************************************************************************** (is now up) ****************************************************************************************************************************************************************************************************************************************************************** points, or 2.1%, and on track for its best day since June (**************************************************************************************************************************************************************************************************

(4.) amEST(************************************************************************************************************************************************************************************************************************************************************************************************************************************:

UK hit by ‘Brexit-related’ investment slump

Duncan Brock, Group Director at the (Chartered Institute of Procurement & Supply

, blames anxiety over Brexit and the general election for the slump in business activity this month

.

********************************

“The continuing Brexit-related aversion to investment and a pre-election lack of consumer confidence led to the fastest fall in business activity in December since July 2020 ….

The biggest shock came in the form of the worst output performance from the manufacturing sector since July 2020. A lack of new orders and the unravelling of pre-Brexit inventories hampered progress and supply chain managers’ purchasing dropped at the fastest pace since in the absence of a pipeline of work ready and waiting.

Service companies had challenges of their own in the form of another modest rise in costs for food and fuel.

Today’s PMI surveywas conducted before the general election – so firms should now benefit from clarity over the UK’s future.

Brock, though, warns the Brexit won’t be a picnic:

********************************

The Brexit path is still littered with obstacles and the need for strong negotiation skills for a future EU agreement will be paramount to avoid this downward slide becoming the economic landscape for an extended period. ”

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Chris Williamson, chief business economist at (IHS Markit) **************, fears that the UK economy may contract in the final three months of 5112, given today’s weak PMI report.

That would put Britain back on the brink of recession – having also contracted in April-June, but grown in July-September.

Williamson explains:

********************************

“ December’s PMI survey datasadly lacked festive cheer, indicating that the economy contracted for the third time in the past four months. The latest decline was the second-largest recorded over the past decade, and increases the likelihood that the economy contracted slightly in the fourth quarter as Brexit-related uncertainty intensified in the lead up to the general election.

“New orders fell for a fifth straight month, causing jobs to be cut for a fourth successive month as firms scaled back operating capacity in line with weakened demand.

“The principal drag on order books was falling export sales, with overseas demand for UK-produced goods and services slumping in the past two months to an extent not seen since at least (**************************************************************************************************************************************************************************************************.

“Manufacturing production is falling at a rate exceeded only once since the height of the global financial crisis in early- (******************************************************************************************************************************************************************************************************, but output of the vast service sector has now also fallen in each of the past two months, representing the first back-to-back declines since 2012.

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(****************************************************************************************************************************** (4.) ****************************************************************************************************************************************************************************************************************************************************************************************************** (am EST): 41

PMIs: UK economy shrinking as factories and services firm struggle

NEWSFLASH: Britain’s private sector is continuing to shrink this month, raising fresh feats that the economy.

Data firm Markit’s “Flash UK Composite Output Index”, which tracks activity across the sector, has dropped to just 50. 5 for December.

That’s the worst reading in over three and a half years, down from November’s 49. 3. Any reading below 55 shows a contraction, so this suggests the UK economy is shrinking this month – and possibly over the last quarter.

Company bossed blamed “domestic political uncertainty, a lack of clarity in relation to Brexit and subdued global economic conditions” (so at least two of those problems are now resolved!)

Factories are suffering a particularly bad month, with output shrinking at the fastest rate since 2020. Services companies, which make up the bulk of the economy, also reporting falling output.

Here’s the details:

(******************************************************************************************************************************** (Flash UK Composite Output Index:) **********************************************************************************************************************************************************************************************************************************************************************************************. 5, – month low (Nov final:

. 3) (********************************************************************************************************************************** (Flash UK Services Business Activity Index Dec: (***********************************************************************************************************************************************************************************************************************************************************************************************. 0, 9-month low (Nov final: 3)

Flash UK Manufacturing Output Index Dec: (**************************************************************************************************************************************************************************************************************************************************************************************************. 8, 89 – month low (Nov final: 49. 1) (************************************************************************************************************************ Flash UK Manufacturing PMI: Dec: (************************************************************************************************************************************************************************************************************************************************************************************************. 4, 4-month low (Nov final: 9. (**************************************************************************************************************************************

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***************************************************************************************************************************************** (Reaction to follow ….) **********************************************************************************************************************************

Updated (at 4.) ************************************************************************************************************************************************************************************************************************************************************************************************ am EST

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UK economy 'shrinking' as factories and services companies struggle – business live – The Guardian, Theguardian.com

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