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Macro Comment UK - Upward revision contingent on political pragmatism

Stronger-than-expected short-term momentum suggests that our GDP estimate for 2018 might be too low and our unemployment estimates for 2018-19 a little high. A more hawkish Bank of England and short-term momentum lead us to expect a rate hike in May. However, our expectation for a hike is dependent upon the assumption that the UK and the EU are able to strike a transition deal. For this to happen it would take some serious political pragmatism on both sides, but history has shown us that this often kicks in at the eleventh hour.

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Macro Comment UK - Upward revision contingent on political pragmatism

 

Kari Due-Andresen

Chief Economist Norway

Norway and UK

kadu01@handelsbanken.no

Latest analyses

2018-02-16

Macro Comment UK

2018-02-15

Morgenrapport Norge

2018-02-13

UK Comment

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UK Comment — Mixed monthly data from the UK

    Industrial production down by 1.3% in December, but manufacturing up by 0.3%UK industrial production fell by 1.3 percent in December, after growing by 0.3 percent in November (revised from 0.4 percent). The consensus expectation for December was -0.9 percent. The monthly fall was the first since March 2017 and the largest fall since September 2012. However, the only downward contribution came from mining and quarrying, which decreased by 19.

    Kari Due-Andresen, Chief Economist Norway | kadu01@handelsbanken.no

Fast Comment Finland — Industrial output rose by 3.3 percent in 2017

  1. Industrial production increased by 4.2 percent y-o-y in December
  2. New manufacturing orders fell by 4.3 percent y-o-y in December
  3. Strong year in 2017, but goods exports showed some signs of softening toward year end

Janne Ronkanen, Senior Economist | jaro06@handelsbanken.se

Fast Comment Norway — Mainland GDP growth still stronger than trend

  1. Mainland GDP growth at 0.6% in Q4 after 0.7% in Q3 (revised from 0.6%)
  2. Growth pulled down by oil-related activities in Q4, but should be temporary
  3. Development well in line with Norges Bank's forecast

Kari Due-Andresen, Chief Economist Norway | kadu01@handelsbanken.no

CPI-ATE clearly undershoots expectations in January —

  1. CPI-ATE at 1.1 percent in January, down from 1.4 percent in December
  2. Clearly weaker than Norges Bank's estimate of 1.4 percent
  3. Air fares and clothing and shoes pulled down the y-o-y rate

Halfdan Grangård, Senior Economist | hagr11@handelsbanken.no

UK Comment — A more hawkish tone from the Bank of England

  1. Policy rate unchanged at 0.5% and QE programme also unchanged. Decision was unanimous
  2. Forecast for real economy revised up
  3. MPC expects policy tightening sooner and to a greater extent

Kari Due-Andresen, Chief Economist Norway | kadu01@handelsbanken.no

Fast Comment Norway — Sharp increase in manufacturing output in December

  1. Manufacturing output up by 1.3 percent in December, following 0.3 percent in November
  2. The quarterly pace rose substantially in Q4
  3. Supports our case for an above-consensus reading for mainland GDP (due Friday morning)

Marius Gonsholt Hov, Senior Economist | maho60@handelsbanken.no