The Saturday Economist : UK Economics news and market updates on the 1st September 2012.

1. The Saturday Economist johnashcroft.co.uk
Action this day - a V sign to plan A Saturday, 1 September 2012
Economic news this week, OTHER NEWS
Latest forecasts from the CBI Lending to individuals
and the Chambers of Commerce Latest lending data pretty flat
suggest the economy will up by just 0.7% in July.
shrink by between -0.3% and --------------------------------
-0.5% for the year as whole Consumer Credit
before rallying slightly to 1.2% Down in July as twelve month
in 2013. rate fell by 0.6%.
------------------------------
Inflation is expected to remain House Prices
close to the Bank of England Rallied rebound in August
target by the end of the year at according to Nationwide.
around 2%. ---------------------------------
Vauxhall shut down
Effectively the economy is After the excitement of July
John Cridland, the CBI Director General is calling for the
flatlining rather that shrinking, reality hits as Euro demand
government to be more Churchillian and take immediate
A classic liquidity trap with slumps
action on key insfrastructure projects.
interest rates at the zero bound -----------------------------
domestic demand stifled and
’In the war Churchill said “Action this day”, and Money Supply - July
firms unwilling to invest. that is what we need now.’ said the CBI DG. An economy flatlining.
Closing : FTSE : 5,711; 10 Year Gilts 1.66%, Oil Brent Crude $114.57; Gold $1,669; $ 1.581; € 1.261

2. The Saturday Economist johnashcroft.co.uk
UK lending pretty flat ... Saturday, 1 September 2012
Total lending to individuals The household
rose by £0.9 billion in July, sector’s holdings
compared to the previous six- of M4 increased
month average increase of by £6.8 billion in
£0.8 billion. July, compared
to an average
The twelve-month growth monthly increase of
rate was unchanged at 0.7%. £4.3 billion in the
Within total lending, lending previous six months.
secured on dwellings rose by
£1.1 billion, compared to the The annual growth
previous six-month average rate was 4.6%.
increase of £0.8 billion.
M4 lending
The three-month annualised (excluding compared to an average monthly increase of £0.6 billion
growth rate was unchanged at the effects of in the previous six months. The annual growth rate
0.5% whilst the twelve-month securitisations etc) was 0.7%.
growth rate was unchanged at to the household M4 lending (excluding the effects of
0.8%. sector increased by securitisations etc.) excluding intermediate OFCs was
Money Supply £1.0 billion in July, £1.863.3 approximately 120% of GDP.

3. The Saturday Economist johnashcroft.co.uk
Consumer Credit fell in July ... Saturday, 1 September 2012
Consumer credit sixmonth average
decreased by £0.2 billion 50,729.
in July compared to
the previous six-month The number of approvals
average of £0.0 billion.
for remortgaging 25,273
also increased in July but
The twelve-month growth
rate was -0.6%. Within was lower than the
consumer credit, credit card previous six-month
lending decreased by £0.1 average (28,649).
billion and other loans and
advances decreased by £0.1 The number of approvals
billion. for other purposes
similarly rose in July
The number of loan (15,778) and was Credit card lending fell by £0.1billion,
approvals for house below the previous six-
purchase (47,312) month average (18,035).
consumer credit decreased by £0.2 billion.
increased in July but was
lower than the previous

4. The Saturday Economist johnashcroft.co.uk
UK House prices rebound in August? Saturday, 1 September 2012
UK house prices bounced
in August according
to the latest data from
Nationwide.
The price of a typical UK
house increased by 1.3% in
August but prices remain
just under 1% lower than
a year ago. The price of a
typical home is £164,729.
Mortgage approvals and
first time buyer volumes
remain some 50% below
the period 2005 - 2007.
The FTB share of volume
remains pretty constant
around 38% of activity.

5. The Saturday Economist johnashcroft.co.uk
Vauxhall shuts down production Saturday, 1 September 2012
Vauxhall is to cease According to the Telegraph,
production for a week the shutdowns are in stark
in response to a fall in contrast to Jaguar Land
demand in the eurozone. Rover which has moved
to a 24 hour production
After the excitement of schedule to meet growing
the July car production demand for the Evoque.
figures up by over 20%
year on year according Demand for UK cars is
to the SMMT, reality hit likely to hit 2 million units
the car market in August this year - production may
as Vauxhall announced a peak around 1.45 million
plant shut down in two UK units.
factories.
Eighty per cent of output
So much for the march of is destined for exports,
the makers, the problems the UK will remain a net
in Europe will result in a importer of around 0.8
September shut down in million vehicles and a lot of
Ellesmere Port and Luton. car parts in addition.
Page 5

6. The Saturday Economist johnashcroft.co.uk
What happened in the world this week Saturday, 1 September 2012
Return to Gold? Weak demand in the
Madness is in the air in the West has hit exports. as
US as Peter Schiff of Euro ratings agencies Fitch and
Pacific Capital suggested Standard & Poor’s threaten
the US would return to the to downgrade India’s
gold standard. sovereign ratings to junk
Can the barbarous relic Euro unemployment
Bernanke stimulus make a comeback priced at The number of people out
US stock markets rose Indian Economy
$2000 an ounce. Not really of work in the eurozone hit
as after Ben Bernanke The economy grew 5.5%
Peter. Hopefully we have 18 million for the first time
signalled he would consider in the second quarter,
been through all this before. in July. The jobless rate
another round of QE to government data showed
stood at 11.3%.
stimulate growth. on Friday, just above the
5.3 percent posted in the
Despite an upward revision three-month period ending
to US GDP data for Q2, in March and slightly
unemployment at 8.3% was better than economists’
of “grave concern”. It is an expectations in a Reuters
election year after all. poll.
Page 6

7. The Saturday Economist johnashcroft.co.uk
Professor Milton Keynes column Saturday, 1 September 2012
GDP and Claimant Count Comparisons
I am still puzzled by the In this chart the blue line GDP ONS PMK
strength of the employment represents the change in Q4 0.6 0.6
data and the apparent GDP year on year and the Q1 -0.2 1.2
weakness of the GDP red chart represents the Q2 -0.5 1.7
figures as published by quarter on quarter change Q3 na 1.8
the Office for National in the claimant count.
Statistics writes our resident
head of research Professor It is inverted so that as the
Milton Keynes this week. claimaint count increases,
the inverted chart falls in
Most people still think of line with the GDP change.
employment as a lagging
indicator of economic The most recent two
growth but as my chart quarters suggest the
explains, the claimaint estimates for GDP decline
count provides an extremely are at odds with the
reliable coincident indicator employment data. Far from
of trends in the economy. falling, the economy may
well be growing.
Page 7

8. The Saturday Economist johnashcroft.co.uk
Markets : FTSE 5,711 : DOW 13,091 : Nasdaq 3,049 : DAX 6,971 Saturday, 1 September 2012
FTSE 5,711 - 65 £:$ 1.587 + 00 bp
DJIA 13,091 - 67 £:€ 1.261 - 00 bp
NASDAQ 3,049 - 20 $:€ 1.258 + 00 bp
DAX 6,971 - 00
$:¥ 78.10 - 6 bp
CAC 3,413 - 20
Base Rate 0.50%
Nikkei 8840 - 231
10 yr UK 1.66% +13 bp
Hang Seng 19,483 - 397
10 yr US 1.55% -14 bp
10 yr Euro 1.34% - 01 bp
Brent Crude $ 114.57+ 0.98
Copper 345.80 - 2.4
WTI Crude $ 96.56+ 0.30
Corn 802.00 - 1.0
Gold $ 1.690 + 21.0
Wheat 871.00 +2.0
Silver 5000 $ 3,168 + 107
Cotton 76.40 +1.8
Platinum $ 1,541 - 10
Page 8

9. The Saturday Economist johnashcroft.co.uk
Growth Inflation Unemployment Government Borrowing
GDP in the second quarter Inflation CPI basis was 2.6% Claimant count in July fell In the first three months to
fell by 0.5% year on year as in July. Inflation RPI and by 5,900 to a level of just June, Government was up
the recovery of 2010 petered RPIX increased to 3..2% from under 1.6 million and a rate by £4.5 billion. Borrowing
out in 2011. 2.8%. of 4.9%. is likely to exceed the levels
achieved in 2011/12.
Growth in Q1 fell by 02%. In Manufacturing price inflation The LFS count fell slightly
2011 UK growth was up by fell to 1.7% in July, latest (three months to June) to a
0.8% and 1.8% in 2010 . earnings up by 1.8% in May. level of 2.56 million. 8.0%

10. The Saturday Economist johnashcroft.co.uk
Latest Economic Indicators Saturday, 1 September 2012
Indicator Period Latest Source Notes
Inflation CPI July 2.6% ONS
Inflation RPI July 3.2% ONS
Inflation RPIX July 3.2% ONS
Earnings June 1.6% ONS Whole economy
Retail Sales Volume July 2.8% ONS year on year comparison
Retail Sales Value July 3.1% ONS year on year comparison
Unemployment m June 2.56m ONS LFS millions trailing three months
Unemployment % June 8.0% ONS LFS per cent trailing three months
Claimant Count m July 1.593 ONS Million
Claimant Count % July 4.9% ONS per centage
PPIs output July 1.7% ONS Manufacturing prices output
PPIs input July 1.3% ONS Manufacturing prices input
GDP change Q2 -0.5% ONS year on year comparison
Manufacturing July -4.3% ONS year on year comparison

11. The Saturday Economist johnashcroft.co.uk
The Saturday Economist is a round up of the The publication of this document should not be
week’s economics news for the UK published construed as the giving of investment advice.
on the web site johnashcroft.co.uk.
Forecasting is subject to frequent revision
The information is also available as a PDF Please remember we are forecasting the output
download. of the Office for National Statistics which may,
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The information was originally published in
short form in the Sunday Times and Croissants All views expressed in the Saturday Economist
weekly blog post and has been expanded are my own. Information is intended to provide
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should neither be regarded as comprehensive
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In particular, no reliance should be placed on Data adapted from the Office for
the comments or trends in financial markets. John K Ashcroft National Statistics licensed under
Open Government Licence .v.1.0.

12. The Saturday Economist johnashcroft.co.uk