Rishi Sunak has weighed in on the “de-banking row’ gipping the UK financial sector, arguing that the focus should be on the “values that are at stake” rather than on individuals. We don’t expect governor Bailey to push back against market pricing for rates, although sterling would undoubtedly sell-off should he do so.” “The communications should remain hawkish, and we expect the guidance to once again state that additional tightening is likely should inflation prove persistent. “Once again, however, the MPC is unlikely to be in total agreement, and we could see a three-way split vote, where one member ( Swati Dhingra) supports no change, while one or two plump for a 50 basis point move.” “We expect the Bank of England to revert back to a 25 basis point rate increase this week, with the June inflation miss and signs of a modest slowdown in the UK economy likely to warrant a smaller hike. While we don’t see an argument for the MPC to end the tightening cycle just yet, this should provide more than enough ammunition for committee members to justify a return to a 25bp hike this week. Matthew Ryan, head of market strategy at global financial services firm Ebury, predicts a three-way split on the Monetary Policy Committee, with the majority voting for a small, quarter-point increase in Bank Rate to 5.25%, from 5%. Speculation is building about what the Bank of England may decide on interest rates on Thursday. North America was a comparative bright spot, with mild growth in Canada and Mexico.Ī slight expansion of output in the US represented a stabilisation following June’s marked retrenchment Japan, mainland China, South Korea, Taiwan, Vietnam and Malaysia all saw output contract. There were also signs of weakness developing in Asia. The performances of Austria, Germany and Italy were especially weak. The main drag on output was a severe downturn in activity in the euro area, where production contracted to the greatest extent since the height of the global pandemic in spring 2020. There was a “sharp downturn in the euro area”, the report shows, while Asia showed signs of weakness and international trade flows deteriorated further. The JP Morgan Global Manufacturing PMI, which crunches all the latest polls of purchasing managers, was unchanged at 48.7 in July, a level that shows a contraction. July saw output at world factories decline further as the downturn in new order intakes was extended to a thirteenth consecutive month. The upshot of today’s manufacturing reports from Asia, Europe and the US is that the global manufacturing sector remained mired in contraction last month. 16.55 BST Global manufacturing downturn continues as output and new order fall at faster rates House prices fell at their fastest rate in 14 years last month, down 3.8% year-on-year, according to Nationwide. The UK property sector is already being cooled by higher borrowing costs. Thomas Pugh, economist at RSM UK, warned that the UK economy could slip into recession early next year, as the real economy is hit by higher interest rates.Įurozone factories also struggled last month, with production volumes, new orders, employment and purchasing activity all falling, as customers resisted buying new goods and focused on running down their stockpiles. The downturn in the UK manufacturing sector took a turn for the worse in July, as rates of contraction in output, new orders and employment all accelerated. The S&P Global / CIPS UK Manufacturing PMI fell to 45.3 in July, showing a sharper downturn than in June. 12.17 BST Summary: Why recession fears are rising todayįears of a UK recession are swirling after Britain’s manufacturing sector recorded its worst month of the year in July, and as rising interest rates hits the housing sector.Ī closely watched gauge of the factory sector dropped to its lowest level in 2023, and its joint-worst since May 2020, continuing a year-long slump for the industry.
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