Rates held as growth continues
Friday 07 February 1997
There was further backing for Mr Clarke's apparent decision in a new forecast from the London Business School today. It predicts a further pick-up in growth this year despite the strength of the pound, but said the currency would help keep inflation below target.
But the favourable state of the economy will not necessarily help the Government win the election, according to an analysis in the new report. It concludes the Conservatives cashed in their reputation for good management of the economy to win the 1992 election, and have not yet restored their credibility. The longer Mr Major can delay the election, the better his chances will be, according to economist Simon Price.
Industrial output increased by 0.6 per cent in December, while its manufacturing component climbed 0.2 per cent. With data for October and November revised up, total production rose by 0.9 per cent in the final quarter of last year to a level nearly 2 per cent up on a year earlier.
The figures showed that manufacturing remained on a gentle upward path despite the strong pound. There were drops in engineering and textiles output during the month. Chemicals showed the biggest gain.
Outside manufacturing, there were sharp increases in both electricity, gas and water, due to the bad weather, and mining and quarrying.
Separately, the Confederation of British Industry reported retail sales volumes had picked up in the year to January. According to its distributive trades survey, the balance reporting higher rather than lower sales was 36 per cent, up compared with December and January 1996, but weaker than the summer.
Alastair Eperon, chairman of the survey panel, said: "Retailers did better in terms of January's sales growth than they had expected as consumers were confident enough to step up their spending. However, the rate of underlying sales growth eased for the second consecutive month, although the increase in trade remains robust."
Analysts now believe base rates will stay at their current level of 6 per cent until after the general election. "The softness of the December data generally has clearly given Mr Clarke a window of opportunity to avoid raising base rates this month and a move ahead of the election now seems highly unlikely," said Adam Cole, UK economist at James Capel.
But opinions about whether this is the right policy are divided in the City. Mr Cole said: "This is a policy error in the making." The economy would grow fast enough this year to force post-election rate increases, he predicted.
- 1 The political parties aren't all the same – which means 2015 will be a 'big-choice' election
- 2 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 3 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 4 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 5 Naomi Wolf reacts to Isis 'conspiracy theories' critism after she questions whether beheading videos are real
President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
UK weather: Warning for more snow and ice as freezing temperatures and gales hit Britain
Three killed at South Korean nuclear reactor days after hackers target country's atomic agency
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Immigrants make UK racist, says Ukip councillor Trevor Shonk
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Katie Hopkins speaks out on childhood obesity: 'Parents of fat children should be prosecuted for child cruelty'
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...