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GDP revisions could delay rate rise, says LSR

The Bank of England may be less likely to raise interest rates in May because of revisions to last year’s GDP figures, according to Lombard Street Research.

Yesterday, the Office for National Statistics said that GDP growth in Britain fell by 0.5 per cent in the final quarter of 2010, rather than the previously estimated 0.6 per cent contraction.

Jamie Dannhauser, an economist at LSR, claims the Bank’s Monetary Policy Committee will find the new data to be “a concern” but says the revisions for the whole of 2010 paint a more worrying picture.

“More of the stimulus to domestic spending through 2010 is now estimated to have come from inventories rather than final demand,” he explains, adding that last year’s economic growth was further subdued by expansion in net exports.

The economist suggests that previous estimates about the strength of consumer demand in Britain have been “overstated”, although it remains unclear whether this is a temporary effect of the VAT rise in January or permanent pressure from rising inflation and eroded disposable incomes.

Dannhauser predicts this uncertainty will be sufficient to convince the MPC to hold off any interest rate increases until the summer, when new data may shed further light on the health of the country’s economy.


Hogg quits FSA to join reinsurer

FSA insurance sector director Ken Hogg is leaving to join reinsurer RGA as chief actuary and financial officer for the UK. He joined the FSA in July 2009 from an interim role as chief financial officer at MGM Advantage. He was previously chief operating officer at AIG Life and spent 20 years at Aegon, holding […]

Out of context

“Imagine my surprise when I arrived at the hotel, only to be greeted by an empty drinks bar, a lack of champagne reception and Roy Hodgson arriving in a lounge suit.” Building Societies Association head of mortgage policy Paul Broadhead was so excited he turned up at the Money Marketing Awards two days early. “I […]


Osborne says industry advised on FTB scheme size

Chancellor George Osborne says he was advised by the industry against increasing the Government’s new first-time buyer scheme beyond 10,000 homes. In last week’s Budget, Osborne unveiled plans to support FTBs moving into new build properties with the Government and house builders stumping up a 20 per cent deposit in the form of low-interest loans. […]

IFAs have just days to lock clients into GAD

IFAs face a race against time if they want to lock clients into the 120 per cent GAD income rates for the next five years, according to Suffolk Life. Treasury reforms ending compulsory annuitisation come into force in just six days time. Under the new rules, investors entering drawdown for the first time from April […]

European Opportunities: 'It’s nice when stock selection results in a macro tailwind'

Amid significant macro headwinds in August, Mark Page explains why his fund’s focus on stock selection has helped it outperform a falling market in August. BESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswy


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