March of the makers misfires

You’d have a reporter on a trading floor in such and such an investment bank staring at a live feed of numbers on a computer — and the excitement through the screen was palpable. Will it be a hold, a cut or maybe even a rise?

These days, that uncertainty is long gone.

And though there was speculation a month or so back that the first interest rate rise for many years was coming imminently given the strength of the UK economy, this has now all but disappeared. The odds on a rise in bank rate any time soon are lengthening fast.

They'll be even longer in the wake of the latest UK economic data published this morning by the Office for National Statistics.

This showed that manufacturing output in July was 0.8% lower than in June, and that the trade deficit rose from £2.6bn in June to £3.4bn in July (and rose, importantly, for exports to both EU and non-EU countries). This data has added to concerns that Q3 GDP will be weaker than Q2.

So what's happening? Well to start with, the strength of the pound is hitting UK exporters hard. It's making everything we produce over here a lot more expensive.

Throw in recent market turmoil, with China at its core, and weak demand generally especially from the Eurozone, and it’s not a pretty picture. In fact, there’s every reason to believe manufacturing output could fall even further in August.

This, of course, isn't great news for George Osborne and friends, who are desperate to shift the UK economy away from its continued reliance on the services sector for growth - which automatically gears the economy and gives Government the heebie jeebies.

As we enter Autumn, the one-time clamour by the Chancellor for a "march of the makers' is looking ever more distant.

Attributed to Jonathan Samuels of Dragonfly Property Finance