Presentation to DUP Conference 2013

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Presentation by Ulster Bank Chief Economist, Northern Ireland, Richard Ramsey to the DUP Conference 2013 about the recovery, cost of living and the new reality for households and government

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Presentation to DUP Conference 2013

  1. 1. DUP Conference La Mon Country Club 23rd November 2013 Richard Ramsey Chief Economist Northern Ireland richard.ramsey@ulsterbankcm.com
  2. 2. The hills are alive with the sound of recovery Slide 2
  3. 3. A recovery is well underway in terms of output Private Sector Business Activity - PMIs 65 NI UK RoI Expansion 60 55 50 Contraction 45 40 35 Source: Markit & Ulster Bank NI PMI 30 Oct-04 Apr-06 Oct-07 Apr-09 Oct-10 Apr-12 Oct-13 Slide 3
  4. 4. Slide 4
  5. 5. But no sign of a recovery with household incomes % UK Average Weekly Earnings & CPI Inflation Annual % Change 6 Average Weekly Earnings CPI Inflation 5 4 3 Income squeeze 'NICE' Decade 2 2.2% 1 0 Oct-01 Does not include taxes or changes to benefits Oct-03 Oct-05 Oct-07 Oct-09 Oct-11 0.8% Oct-13 Slide 6
  6. 6. The cumulative impact of inflation has been severe Cumulative % Change in UK Consumer Prices since 'Credit Crunch' began (Aug 07 to Oct 13) 70% 60% 50% 40% 30% 21.2% 20% 11.0% 10% 0% Electricity Gas & Other Fuels Transport Services Transport Fuels & Lubricants Food Total CPI Average Earnings Slide 7
  7. 7. What has happened to food prices over the last 6 years*? +68% +23% +33% +84% +41% +42% * % change between August 2007 – August 2013
  8. 8. What has happened to energy prices over the last 6 years*? +35% / 40% +47% +77% +84% * % change between Aug-07 – Sept-13 (Oct-13 for petrol / diesel)
  9. 9. Consumer behaviours are changing… Slide 10
  10. 10. …prepayment has become more popular % % of Electricity Customers Paying via prepayment 40 NI UK 35 30 25 20 15 10 5 Source: DECC 0 2005Q3 2007Q1 2008Q3 2010Q1 2011Q3 2013Q1 Slide 11
  11. 11. Budgeting has become more difficult for Government too but at least it can always borrow… £602 bn* * Source: OBR March 2013 refers to 2011/12 to 2017/18 Slide 12
  12. 12. But given where the public finances are heading changing behaviours is unavoidable £Bn UK Public Sector Net Debt 2000 Source: ONS, OBR March 2013 1750 1500 1.5 Trillion Pounds of Debt 1250 One Trillion Pounds of Debt 1000 750 500 250 0 2001-02 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 2015-16 2017-18 Slide 13
  13. 13. Households & Government face common challenges  An economic recovery is underway  But a recovery in the household & public finances remains a long way off  Government, like households, is having to change behaviour to adapt to the new reality Slide 14
  14. 14. Out of every crisis springs opportunity “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty”. Winston Churchill Slide 15
  15. 15. Disclaimer This document is issued for information purposes only for clients of Ulster Bank Group who are eligible counterparties or professional customers, and does not constitute an offer or invitation to purchase or sell any instrument or to provide any service in any jurisdiction where the required authorisation is not held. Ulster Bank and/or its associates and/or its employees may have a position or engage in transactions in any of the instruments mentioned. The information including any opinions expressed and the pricing given, is indicative, and constitute our judgement at time of publication and are subject to change without notice. The information contained herein should not be construed as advice, and is not intended to be construed as such. This publication provides only a brief review of the complex issues discussed and readers should not rely on information contained here without seeking specific advice on matters that concern them. Ulster Bank make no representations or warranties with respect to the information and disclaim all liability for use the recipient or their advisors make of the information. Over-the-counter (OTC) derivates can involve a number of significant and complex risks which are dependent on the terms of the particular transaction and your circumstances. In the event the market has moved against the transaction you have undertaken, you may incur substantial costs if you wish to close out your position. Ulster Bank Limited Registered Number: R733 Northern Ireland. Registered Office: 11-16 Donegall Square East, Belfast BT1 5UB.Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Member of The Royal Bank of Scotland Group. Calls may be recorded. Slide 16

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