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September 2022

With the UK having a new prime minister and monarch in the same week, one could be forgiven for assuming economic news would take a back seat this month. However, the economic effects of Russia’s invasion of Ukraine have not gone away, and the new administration has a lot to deal with.

Headline Indicators summary

GDP was flat (+0.0%) in May-July 2022 compared to the previous three-month period (February-April). This compares to growth of 0.8% in the Eurozone in Q2 2022.

Services output was up by 2.4% in the three months to July 2022 compared to the previous year. Manufacturing output rose by 1.7%.

CPI inflation was 9.9% in August 2022, down from 10.1% in July. Inflation in the Eurozone was a record high of 9.1% in August, up from 8.9% in July.

The Bank of England’s Monetary Policy Committee (MPC) raised interest rates to 2.25% on 22 September, up from 1.75%. This was the seventh rate rise in a row.

Average wages excluding bonuses were 5.2% higher in the three months to July 2022 compared with the year before. CPI inflation for this period was 9.5%.

32.75 million people were in employment in May-July 2022, up 337,000 from a year before. The employment rate was 75.4%, up from 75.1% the previous year.

1.22 million people were unemployed in May-July 2022, a fall of 332,000 from the year before. The unemployment rate was 3.6%. The UK harmonised unemployment rate for Q2 2022 was 3.8%, above the rate of Germany (2.9%) and the US (3.6%) but below that of France (7.6%).

Productivity across the whole UK economy was flat (change of 0.0%) in Q2 2022 compared with the previous quarter. Compared with the previous year, it was down by 1.0%.

Government borrowing in the financial year to August 2022 was £58 billion according to the ONS’s latest provisional estimate, £21 billion less than in the same period last year. At the end of August 2022, public sector net debt was equivalent to 96.6% of GDP, compared with 94.7% a year ago.

The UK had a trade deficit of £28.3 billion in the three months to July 2022, compared with a £30.7 billion deficit in the previous three months. The current account deficit was £51.7 billion in Q1 2022 (8.3% of GDP), up from £7.3 billion in Q4 2021 (1.2% of GDP).

The value of sterling rose by 0.3% between July and August 2022, following a fall of 0.4% between June and July. Compared with a year ago, it is 3.5% lower.

The volume of retail sales decreased by 1.1% in the three months to August 2022 compared with the previous three months, and decreased by 5.1% compared with the previous year.

GfK’s Consumer Confidence Index, which measures consumer attitudes, was at -49 in September 2022, down by five points from -44 in August to a new record low.

House prices increased by 15.5% in the year to July 2022 (although note that prices in July 2021 were affected by a stamp duty holiday becoming less generous).

Household debt stood at 131.3% of disposable income in Q1 2022. It has been around this level since mid-2017.

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