UK business world not looking strong and stable

Screen shot 2012-05-24 at 7.16.48 AMThe channel is looking at a financial mess in Theresa May’s “strong and stable” UK this week.

The Office for National Statistics released inflation figures for May. This should be good news as there are signs that  inflation does not appear to be rising as highly as expected with recent PMIs pointing to falling cost pressures.

By the end of this week, we will have a much better idea. Last month, UK inflation stood at 2.7 per cent, the highest level since 2013, but it was not clear if that continued into May.

In the three months to March, UK employment grew by 122,000 on the previous three month period. Unemployment fell to just 4.6 percent, its lowest level since 1975.

But average wages without bonuses by just 2.1 percent. This means that wages will be outstripped by inflation which could hurt the UK domestic economy.

There is a possibility of an increase in UK interest rates in the next year or so seem to be diminishing now that the Conservatives did not get their majority.

Economists think UK inflation is close to peaking, the UK economy is not growing as fast as many forecasts at the end of last year, and the yield on UK government bonds has fallen, with the yield on ten-year treasuries below 1 per cent for the first time since last autumn.

British business confidence has fallen sharply since last Thursday’s inconclusive election.

The survey of nearly 700 members of the business group also exposed deep concern over the political uncertainty and its impact on Britain’s economy.

The IoD found a negative swing of 34 points in confidence in the UK economy from its last survey in May.

While 20 percent of members were optimistic about the economy over the next 12 months, some 57 percent were either quite or very pessimistic – a -37 “net confidence” score. That compares with a -3 percent score in May.