UK: Consumers and businesses slow down spending – Businesses live | Business

Bert Colijn, senior economist in the euro area ING Dutch Bank, indicates that the inflationary trend is down in the single currency bloc, despite the 1.7% rise in April "

In May, the effects of Easter will likely reduce basic inflation considerably.

The euro area's annual inflation rate rose from 1.4% in March to 1.7% in April, according to the flash estimate of the Eurostat statistical office.

Energy prices and service inflation were the main drivers of the rise.

Core inflation – which eliminates volatile elements such as food and energy – also increased from 0.8% to 1.2%.

Christina Iacovides at Capital saving says that the rise in core inflation will not last and is partly due to the Easter time when travel costs tend to increase.

Although we do not yet have a full breakdown of euro area data, we know that the rise in core inflation was due to a sharp rise in inflation in services, which, we suspect, was mainly due to higher prices for vacation packages and air fares, the Easter calendar has pushed up prices for these items in March of last year but in April of this year.

Looking ahead, we expect core inflation to fall to about 1% in May and remain broadly unchanged over the next two years. And with the decline in energy inflation, we expect the overall rate to fall below 1% by the end of this year.

The detail behind the services sector shows that the sector – which accounts for more than three quarters of the UK economy – is hampered by the uncertainties badociated with Brexit.

The PMI services, which includes hotels, bars, hairdressers, financial advisors and many others, showed that new business in this sector has declined for the fourth month, while consumers and businesses have reduced their expenses.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply (who co-produced the report), said there were early warning signs behind the return of strong growth.

Although the stability elements returned this month with a slight improvement in the sector's situation, consumers and businesses continued to show apathy with regard to service spending, with a drop in new orders for a fourth quarter. consecutive month.

Sales from overseas customers also declined, continuing the trend observed since September 2018, so that there was little sign of reviving activities outside the UK.

Britain's huge services sector grew almost in April, according to the PMI survey just published.

The main index of the IHS Markit / CIPS survey rose from 48.9 in March to 50.4 last month, with an index above 50 indicating growth. It was almost in line with economists' expectations of 50.5.

Intu, owner of the Trafford Center and Lakeside in Esbad, Manchester, is the latest company to warn of the worrisome situation of store-based retailers.

The company's shares of shopping centers are down 7% this morning after the company announced that its rental income would fall more than expected this year as stores close at a faster pace.

Intu expects a further increase in voluntary agreements with companies (CVA), an insolvency process that allows troubled companies to close underperforming stores and reduce their rents.

The company estimates that it will now experience a decline of 4 to 6% of its net rental income, on a like-for-like basis. Previously, it was forecasting a 1% to 2% drop, but that did not take into account the planned closure of 50 Debenhams stores and a wave of planned closings of Sir Philip Green's Arcadia group, which includes the Topshop and Dorothy brands. Perkins.

European markets are relatively calm this morning in anticipation of the report on non-farm payroll closely monitored by the United States at 13:30 (UK time).

So far, the FTSE 100 has outperformed, supported by HSBC's better-than-expected first-quarter figures, which have made the bank the leading person this morning, up 2.3 percent. .

• German DAX: + 0.2% to 12,364

• CAC France: + 0.1% to 5,546

• FTSE MIB of Italy: + 0.03% to 21,716

• Spanish IBEX: + 0.1% to 9,429

• STOXX 600 in Europe: + 0.2% to 389

Ben Broadbent also pointed out that the Brexit uncertainty had had an unprecedented impact on business investment – a quarterly decline, even as the economy was not in recession.

He told the BBC Today program:

I think [Brexit uncertainty is] having generalized effects. The most obvious effect relates to business investment. That's what you expected and it's certainly what you heard when, like us, we talk directly to businesses.

Over the past year, we have witnessed successive decreases in business capital expenditures per quarter. It's quite unusual, you've never seen it before an outside recession and it's pretty clear, I think, that it's the result of the impending Brexit.

Hello and welcome to our slippery coverage of the global economy, financial markets, the eurozone and businesses.

The Bank of England surprised no one, leaving interest rates unchanged on Thursday. But, as always, the more nuanced message was in the details of Mark Carney's quarterly inflation report and press conference.

The general message was that interest rates would probably rise faster than markets had expected.

Ben Broadbent, deputy governor of the Bank of England, spoke this morning with BBC Radio 4's Today program to reinforce the message.

He said:

The steps [have been] price barely a rise over the next three years, which is rather a change from six months ago, when we expected a rate increase per year.

The market eliminated some of the rate hikes six months ago. I should say, a rate hike of a quarter point a year … I would not say it's particularly dramatic. We expect the trajectory of interest rates, as they rise, to be limited and gradual.

When asked if he was considering applying for the governorship, which will be released by his boss, Mark Carney, early next year, he replied:

With a deadline of June 5th, he must decide with precision …

Elsewhere, much remains to be done today, and the report on non-farm payroll in the United States is at the center of our concerns.

L & # 39; s calendar

• 9:30 BST: UK PMI survey for services sector for April
• 10:00 am (Paris time): rapid estimate of inflation in the euro area in April
• 13:30 BST: United States: average payroll and average earnings in April