Despite weaker than expected 0.1% monthly GDP growth in UK, NIESR expects growth to pic up in August to 0.7%, followed by 0.8% in September. That would lead to overall 1.6% growth in Q3. It added that however, there are “notable downside risks” to a consumption led recovery, including the re-emergence of Covid-19 and the response of household and business spending to the end of the furlough scheme and the planned reduction in Universal Credit.
“GDP growth of under 0.1 per cent in July would have been negative had it not been for the reopening of an oil field previously closed for temporary maintenance. There was also relatively good news for the arts and recreation sector, thanks to the lifting of restrictions on 19th July, but clearly the boost to GDP from reopening had slowed by the summer. The Delta variant and supply issues – some but not all of which are linked to Covid-19 – have also provided headwinds to growth in the third quarter but there remains potential for ‘catch-up’ in transport, hospitality and arts, which remained between 7 and 19 per cent below their February 2020 levels.” Rory Macqueen Principal Economist – Macroeconomic Modelling and Forecasting.
SNB Zurbruegg: Negative interest rates still needed due to the situation globally
SNB Vice President Fritz Zurbruegg said in a Sonntagszeitung interview over the weekend, “at the moment we need the negative interest rates due to the situation globally.” He warned, “if we were to hike interest rates now, the franc would appreciation markedly, economic growth would slow and joblessness would increase.” He also noted that the pickup in inflation in Switzerland is “temporary”. In the medium term, “we expect it to stay low,” he said.
President Thomas Jordan remains on leave on medical grounds and there is no return date yet. Zurbregg said finding a successor for Jordan “isn’t a topic”. “Thomas Jordan will take up his post again.”