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from MacroScope:

Deconstructing UK job numbers

On the face of it, the good news for the British government keeps on coming. Britain’s economy grew surprisingly fast last year and inflation fell below the Bank of England’s target for the first time in over four years in January. The government this month even got a nod from the International Monetary Fund which only last year criticized its austerity programme.

The latest confidence boost came from jobless figures on Wednesday. Not only did the unemployment rate fall to a five-year low of 6.9 percent but pay growth caught up with  inflation for the first time in nearly four years. That provides Prime Minister David Cameron’s government with another lift ahead of the 2015 elections, after it has come  under fire from the Labour opposition for overseeing a fall in living standards.

But a closer look at the data suggests a more nuanced picture.

Indeed, total pay growth in February reached 1.7 percent – matching the 1.7 percent rise in consumer prices in February and above their 1.6 percent increase in March.

But excluding bonuses, wage growth was 1.4 percent  – below consumer price readings for February and March.

from Photographers' Blog:

After the deluge

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Somerset, Britain

By Toby Melville

After a wet and windy December, in January it rained. And rained. And rained. And it kept on raining. Pretty much for the whole month in southern parts of Britain.

February was no better, bringing heavy storms and high winds. The extreme weather claimed a handful of lives, and flooded thousands of homes.

from The Human Impact:

What to make of the Daily Mail campaign to spend foreign aid on UK flood victims?

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Earlier this week, the right-wing British tabloid the Daily Mail launched a campaign for the government to divert cash  from the foreign aid budget to help victims of the catastrophic floods wreaking havoc in southern England and Wales.

Populist campaigns are nothing new for the Mail, and this one – which attracted more than 100,000 signatures in 48 hours – followed a similar call by populist right-winger Nigel Farage, whose small UK Independence Party (UKIP) wants Britain to quit the European Union and who enjoys thinking up fringe policies which irritate the ruling Conservatives.

from MacroScope:

Relief from UK services inflation seen fleeting

British inflation dipped to 2 percent  in December – its lowest since November 2009 and within the Bank of England’s target. Part of the move was driven by a fall in prices in Britain’s services sector – which constitutes more than three quarters of the country’s output.

Services inflation, which makes up around 47 percent of the consumer price index, eased to  2.4 percent in December – also its lowest since November 2009. Goods inflation – which is more sensitive to global markets than domestically generated services inflation – edged up to 1.7 percent last month. But it has also come down in recent months as a strengthening sterling pushed down import prices.

from Breakingviews:

Tesco’s mediocre plan may be as good as it gets

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By Robert Cole

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Investors’ patience with Tesco, the UK’s largest supermarket operator, is justifiably wearing thin. Shares in the group rose in early trading on Dec. 4, as the company published third quarter sales figures. But that was probably because the numbers were no worse than expected. The stock price slipped back later in the day. Over the last two years Tesco shares have fallen 16 percent while the FTSE 100 has risen 17 percent.

from MacroScope:

The big questions on the UK housing market: what the analysts say

Although UK house prices will head steadily higher in the next two years, analysts polled by Reuters are divided over whether the Bank of England can restrain the market if it overheats. Here's what they said in the latest Reuters poll, taken this week: How confident are you in the BoE's ability to moderate the housing market if necessary?

PETER DIXON, COMMERZBANK: "Not very. A cynical interpretation would be that the government wants to see a decent rise in house prices over the next couple of years and would not be best pleased to see the BoE take the steam out of it. Nor is it clear that the BoE has the policy instruments to target the housing market without causing collateral damage elsewhere in the economy. Finally, it would call into question the thrust of policy if Help to Buy is giving to the housing market with one hand whilst the BoE is taking away with another."

from Breakingviews:

Royal Mail risks are as real as ever

By Robert Cole

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Royal Mail has cleared its first hurdle as a public company. But deep-seated challenges remain, and the UK postal firm’s current market value looks too rich.

from MacroScope:

Forward guidance not banking on Scottish independence

There are many unknowns surrounding a Scottish vote in favour of independence at next year's referendum, a potentially huge event for the British economy. But one that has attracted little attention is what it would mean for UK interest rates.

As part of its forward guidance policy, the Bank of England has promised that it will not consider raising rates from record-low levels until unemployment in the UK - 7.69 percent at the most recent reading - falls to 7 percent. It expects this to happen in late 2016, though some investors think the jobless rate could fall much quicker.

from MacroScope:

From 1999: Another UK housing bubble? No chance!

While debate rages on whether or not Britain is heading into a new housing bubble, here's a Reuters poll from 1999 that asked the same question. The answer then was,  "No, this time is different", and it featured a lot of the same arguments we're hearing today.

Here it is, posted in full:

POLL-UK property recovery not a 1980s bubble

By Penny MacRae

LONDON, Aug 18 (Reuters) - Is Britain seeing a rerun of the 1980s property boom?

from MacroScope:

How to play down a housing boom like it’s 1999

Here's some of the top reasons from a 1999 Reuters poll on why a housing bubble wouldn't form, which are re-appearing 14 years later.

The Bank of England will stop a bubble forming

    2013: "If there's another bubble, the Bank of England and the Government of course have means by which we can anticipate that and ensure that that doesn't happen again." - Danny Alexander, chief secretary to the UK Treasury.
    1999 Reuters poll: "Economists and property specialists say the Bank of England won't let another inflationary boom happen. The Bank has already said it will monitor house prices closely. 'It's unlikely to become inflationary unless the monetary policy stance becomes too loose and that's highly unlikely,' said economist Trevor Williams of Lloyds Bank TSB."

 

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