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News - 27 July 2011

What has the Royal Wedding and the Japanese earthquake got in common?

Although at ABDS we like a joke, this is not the start of one.
The Office of National Statistics (ONS) have said today that the UK economy slowed in the three months to 30th June 2011 because of the extra bank holiday, the devastating disaster in japan, the first phase of Olympic ticket sales and the record warm weather in April.

The ONS estimated that without these one-off factors, GDP would have been 0.5 percentage points higher.

As it is the Gross Domestic Product (GDP) grew by 0.2% in the second quarter, in contrast to a growth of 0.5% in the previous three months.

However,
"The positive news is that the British economy is continuing to grow and is creating jobs," said Chancellor George Osborne.
"And it is positive news too that at a time of real international instability we are a safe haven in the storm."

Abroad, the euro zone crisis poses another risk for Britain with its large banking sector and close trade ties to the area.

The Bank of England has warned that Britain faces tough times ahead and discussions about a fresh round of asset purchases have intensified over the last couple of months among rate-setters, who have kept interest rates at a record low of 0.5 percent for over 2 years now. So far, only Bank policymaker Adam Posen has voted for more quantitative easing.

"The fact the economy is growing more slowly than the Bank anticipated probably means they're going to be a little bit more cautious about raising rates," said Commerzbank economist Peter Dixon. "I would say that pretty much writes off any chance of a hike in 2011 unless we get a growth miracle towards the end of the year."

Lavinia Newman, Founder of ABDS says:
"Most Bank watchers say further stimulus is unlikely as long as inflation runs at more than twice the Bank's 2 percent target and special factors made the assessment of the underlying economic trend difficult."

If you need any help and advice for your business or financial planning don’t hesitate, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar NOW to discuss how ABDS can help.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds.marketing@netaccountants.net
 

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