Economic Update Peter Andrews Agency for Greater London

Economic Update Peter Andrews Agency for Greater London Bank of England November 2011

Prospects for activity and inflation Agency for Greater London

Chart 1 Nov GDP projection; market interest rate exps and £ 275 bn asset purchases Aug GDP projection; market interest rate exps and £ 200 bn asset purchases Agency for Greater London

Chart 1. 1 Bank Rate and forward market interest rates Agency for Greater London

Chart 5. 6 Nov CPI inflation projection; mkt interest rate exp and £ 275 bn asset purchases Chart 5. 7 Aug CPI inflation projection; mkt interest rate exps and £ 200 bn asset purchases Agency for Greater London

Euro area developments and risks • Extreme outcomes excluded from fan charts • But projections capture risks already reflected in: – Asset prices – Bank funding costs – Confidence Agency for Greater London

Money and asset prices Agency for Greater London

Chart 1. 3 Selected European ten-year spot government bond yields Agency for Greater London

Chart 1. 8 UK banks’ longer-term funding spreads Agency for Greater London

Chart 1. 9 Term issuance by major UK lenders in public markets(a) Sources: Bank of England, Dealogic and Bank calculations. (a) Data as at 9/11/11, shown at a quarterly frequency up to 2011 Q 3. Includes debt issued by Banco Santander, Bank of Ireland, Barclays, Co-operative Financial Services, HSBC, Lloyds Banking Group, National Australia Bank, Nationwide, Northern Rock and Royal Bank of Scotland. Term issuance refers here to securities with an original contractual maturity or earliest call date of at least 18 months. It includes subordinated lower Tier 2 and Tier 3 capital instruments with debt features. (b) Senior debt issued under HM Treasury’s Credit Guarantee Scheme. Agency for Greater London

Chart 1. 10 Loans to UK businesses by size Agency for Greater London

Corporate credit availability by firm size Credit Conditions Survey, Oct 2011 Agency for Greater London

Household secured credit availability(a) Agency for Greater London

RICS: regional house prices over past 3 months Agency for Greater London

Demand, output, capacity and employment Agency for Greater London

Chart B Net trade as a percentage of GDP(a) Chained-volume measures. Excluding the estimated impact of MTIC fraud. Agency for Greater London

Chart 2. 11 Household consumption and real income Agency for Greater London

Chart 2. 9 Contributions of expenditure components to changes in demand in recessions and recoveries Agency for Greater London

Chart 2. 12 Business investment (a) Chained-volume measure. (b) Recessions are defined as in Chart 2. 8. Chart 2. 1 UK business and consumer confidence Sources: BCC, CBI/Pw. C, research by Gf. K NOP for the EC, ONS and Bank. (a) Data for manufacturing, financial and consumer/business services surveys weighted using shares in nominal value added. (b) Confidence about turnover. Nsa data for manufacturing and services surveys weighted using shares in nominal value added. (c) Aggregate index derived by averaging answers to Qs 1 -4 and 8 in the Gf. K NOP survey carried out for the EC. Quarterly averages of monthly data. The diamond shows data for October. Agency for Greater London

Agents’ construction scores Agency for Greater London

Chart 3. 8 Labour productivity Chart 3. 9 Survey measures of capacity utilisation Agency for Greater London

Chart 3. 4 Public and private sector employment Agency for Greater London

Change in LFS unemployment rate (three months to August 2011 compared with three months to August 2010) Agency for Greater London

Costs and prices Agency for Greater London

Chart 4. 2 Direct contribution of energy prices to CPI inflation and Bank staff’s central estimate of VAT contribution Agency for Greater London

Chart 4. 5 Dollar oil and industrial metals prices Agency for Greater London

Chart 4. 8 Measures of domestically generated inflation Agency for Greater London

Economic Update Peter Andrews Agency for Greater London Bank of England November 2011