The summary provides the following key points in 3 sentences: UK economic growth continued slowing down in early 2019, with construction contracting and limited growth in other sectors. Both the Bank of England and Office for Budget Responsibility downgraded their 2019 GDP growth forecasts, even assuming an orderly EU exit. While the unemployment rate remains low, risks to the global economy include escalating US-China trade tensions and tightening monetary policy pressures on emerging markets.

1. FABIAN SOCIETY
April 2019
Economic Update

2. SUMMARY
RECENT ECONOMIC DEVELOPMENTS:
• UK economic growth continued slowing down at the beginning
of 2019 with the latest indicators signalling contraction in the
construction sector. The recovery in business investment has
stalled since the EU referendum.
• The Bank of England and the OBR downgraded their forecasts of
the UK GDP growth for 2019, even under an assumption of an
orderly exit from the EU.
• Recent labour market data have continued to surprise on the
upside, with the rate of unemployment continuing to fall.
LOOKING FORWARD:
• The risk of a potential escalation of the trade war between the
US and China remains one of the major risks for the global
economy.
• Emerging markets may be affected by the global slowdown and
further tightening of the monetary policy by developed
Fabian Society |YF Finance & Economics | 1

3. Main Economic Indicators
Fabian Society |YF Finance & Economics | 2
Indicator
Latest
change
6-month
trend
Comment
GDP growth   OBR and Bank of England forecasts revised downwards for 2019.
Current economic
activity   Construction PMI fell into contraction, with limited growth in
manufacturing and services.
Business confidence - - No change in business confidence in the last month.
Consumer confidence (GFK
/ You Gov) change
  February improved slightly from the previous month, although the
levels remain low.
FTSE100/250   The UK stock markets have begun to recover from a fall in Q4 2018,
but at a slower pace than the global stock markets.
Sterling / US Dollar - - Pound is volatile, as it remains under pressure among the
uncertainty over Brexit.
Brent crude prices  
Despite concerns over global slowdown, the oil price has touched
its highest level this year on the back of expectations of tightening
of US sanctions against Venezuela and Iran.
UK 10yr Gilts   Yields have decreased to 1.2% in mid-March, down from over 1.3%
in late February.

4. 0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
GDP,Annual%
Historic Data ITEM Club Winter 2019 OBR BoE
Source : ONS
Updated forecasts from the BoE and OBR show a downgrade in
expected 2019 growth – assuming an orderly exit from the EU
GDP growth, annual % change
Fabian Society |YF Finance & Economics | 3
Rolling 3 month GDP growth
-0.1
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Mar2018
Apr2018
May2018
Jun2018
Jul2018
Aug2018
Sep2018
Oct2018
Nov2018
Dec2018
Jan2019
GDP,3monthrolling%

5. 45
50
55
60
May-15
Aug-15
Nov-15
Feb-16
May-16
Aug-16
Nov-16
Feb-17
May-17
Aug-17
Nov-17
Feb-18
May-18
Aug-18
Nov-18
Feb-19
Services Manufacturing Construction
UK COMPOSITE GROWTH INDICATOR (Purchasing Managers Index, 50+ indicates growth)
GROWTH
CONTRACTION
Fabian Society |YF Finance & Economics | 4Source : CIPS/Markit
Construction PMI fell to below 50 with little recovery for services

6. Source: Office for National Statistics
UK UNEMPLOYMENT RATE AND JOB VACANCIES REAL WAGES AND PRODUCTIVITY IN THE UK, 2006 Q1=100
Recent labour market data have continued to surprise on the upside with
the employment rate at a record high
Fabian Society |YF Finance & Economics | 5
0
1
2
3
4
5
6
7
8
9
410
460
510
560
610
660
710
760
810
860
910
Feb-08
Feb-09
Feb-10
Feb-11
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
Feb-17
Feb-18
Feb-19
Unemploymentrate(%)
Vacancies(thousands)
Vacancies Unemployment rate
0.96
0.97
0.98
0.99
1.00
1.01
1.02
1.03
1.04
1.05
1.06
2006Q2
2007Q3
2008Q4
2010Q1
2011Q2
2012Q3
2013Q4
2015Q1
2016Q2
2017Q3
2018Q4
2006Q1=1
Real wages Output per hour

7. BUSINESS CONFIDENCE, INDEX* CONSUMER CONFIDENCE, INDEX*
Source: YouGov/CEBR/GfK
* Score over 100 means more consumers are confident than unconfident
Consumer and Business Confidence continue to fall in the wake of the
Brexit Referendum
Fabian Society |YF Finance & Economics | 6
-30
-20
-10
0
10
20
30
40
50
-30
-20
-10
0
10
20
30
40
50
Q32010
Q12011
Q32011
Q12012
Q32012
Q12013
Q32013
Q12014
Q32014
Q12015
Q32015
Q12016
Q32016
Q12017
Q32017
Q12018
Q32018
Q12019
Smallbusinessconfidenceindex
Businessconfidenceindex
ICAEW BCM (all businesses) Small Business Confidence Index
-20
-15
-10
-5
0
5
10
100
102
104
106
108
110
112
114
116
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
YouGov GfK

8. 90
95
100
105
110
115
120
125
130
135
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
FTSE 100 FTSE 250 S&P 500 100 benchmark
Source : uk.investing.com
UK: FTSE 100 AND 250
US: S&P 500
01 Jan 2017 = 100
• Global stock markets have continued to
recover from a disappointing end to 2018,
back to October levels
• US markets driven by slower indicated
monetary tightening
Global stock markets recover most of the 2018 Q4 fall
Fabian Society |YF Finance & Economics | 7

9. Source : Financial Times, ONS, insolvency service
UK: INSOLVENCY RATE, ENGLAND AND WALES
Per 10,000 adults
• Interserve – which relies on the UK
Government for 70% of its turnover
and employs almost 45,000 people in
the UK (twice that of Carillion),
entered into administration in March
• LK Bennett – the high street retailer
entered into administration in March,
placing around 200 stores and 500
jobs at risk
• Debenhams – public wrangling
continued between Sports Direct and
Debenhams management to secure
the struggling department store’s
future
• In a sign of ongoing pressure on the
high street, Mothercare sold ELC for
£13.5m, having previously paid £85m
for baby toy chain in 2007
Government contractor Interserve enters administration, while signs
of pressure on the high street continue
Fabian Society |YF Finance & Economics | 8
15
17
19
21
23
25
27
29
31
33
35
2009Q1
2009Q4
2010Q3
2011Q2
2012Q1
2012Q4
2013Q3
2014Q2
2015Q1
2015Q4
2016Q3
2017Q2
2018Q1
2018Q4

10. The UK and Eurozone bond spread widens, as Italian yields
ease down
• US Treasury yields remain well above their European counterparts as the Trump administration pursues a fiscal expansion
• Brexit uncertainty has had a limited impact on UK bond yields by comparison, but a clear spread has opened up against the Eurozone
• Italian bond yields remain the outlier amongst the major European economies, though more pragmatic fiscal signals from the Italian government
have brought yields down somewhat despite the economy entering recession
Fabian Society |YF Finance & Economics | 9Source: Oxford Economics
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Germany France Italy Spain
10-yr government bond yields, %
0.0
1.0
2.0
3.0
4.0
5.0
United States Eurozone United Kingdom

11. Source: Mergermarket
US: ANNOUNCED M&A DEALS*
UK: ANNOUNCED M&A DEALS*
* Lapsed / withdrawn bids are excluded
UK M&A activity fell to lowest level in recent years, while the US
maintains a steady trajectory
Fabian Society |YF Finance & Economics | 10
Recent UK M&A news:
• Sainsbury’s planned £7.3bn takeover of
rival Asda is on the brink of collapse
after the UK competition regulator
expressed “extensive concerns” over
whether there was any way the deal
could proceed without undermining
supermarket competition in Britain –
Financial Times
• UK retailer JD Sports has agreed to buy
the remaining shares of Footasylum in
a cash deal that values the shoe and
clothing chain at £90.1m, a month
after it took an initial 8 per cent stake in
the company – Financial Times
0
100
200
300
400
500
600
700
0
100
200
300
400
500
600
$bn
#
0
20
40
60
80
100
120
140
0
50
100
150
200
$bn
#
Number of deals 3-months value of deals

12. THANK YOU
Authors
Amarvir Singh-Bal
Gregory Gillette
Jeevun Sandher
Contact address:
economynetwork@youngfabians.org.uk