New data set to underline gloomy economic picture

 

Click to follow
The Independent Online

Anxious investors hoping for a respite from the relentlessly gloomy economic news in the UK are likely to be disappointed this week, with little prospect of new data revealing any sort of upturn in fortunes.

The dramatic volatility on the stock market over the past fortnight, caused by rising concern about the slowdown in the global economic recovery and the deteriorating eurozone sovereign debt crisis, could continue with UK data fuelling further nervousness.

Last week's data saw the so-called "misery index", the inflation rate plus the unemployment rate, rise to levels not seen since the early 1990s, but economists believe both indicators may have further to rise. In the short term, the Office for National Statistics is due on Friday to unveil a revised verdict on the UK's growth in the second quarter of the year.

There had been some hopes that its first estimate – that growth was 0.2 per cent between April and June – might prove overly gloomy. But recent data, including poor construction figures, suggest the first forecast was broadly accurate. Moreover, there is concern the economy may actually have faltered further since the end of June, with several gloomy surveys already published.

The CBI is due to issue its latest research into the performance of the manufacturing and retail sectors tomorrow and Thursday respectively. That could add further pressure on the Chancellor, George Osborne, who insisted again last week that his focus on deficit reduction was correct.

Samuel Tombs, an economist at the think tank Capital Economics, warned things are likely to get worse before they get better. "Last week's flurry of data releases underlined the mounting pressures on households' finances and these pressures only look set to intensify in the coming months as inflation rises further and unemployment continues to rise," he said.

"The recent collapse in equity prices has also added to consumers' financial woes. In this environment, then, further sharp falls in consumer spending seem all but inevitable," he added.

Comments