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As key Scottish exports rise..

Deputy governor calms markets on rate hikes

Bank has forecast faster rate rises

A deputy governor of the Bank of England said the slump in markets probably reflected a failure by investors to price in the likelihood of inflationary pressures to accompany global economic growth.

Ben Broadbent also said he expected to see real wage growth and appeared to distance himself from a report that interest rates were poised to double. However, a couple of rate hikes “should not be a real shock,” he said.

“We do not fix the path of interest rates in advance. What is fixed is our remit and rates change with the economy,” he told a briefing after yesterday’s meeting of the Bank of England Monetary Policy Committee voted unanimously to keep rates on hold, but warned of a quickening of any rises.

He said that inflation may be close to peaking.

Markets have now priced in a nearly 70% chance of a rate hike in May, according to one poll.

Volatility continued today, and the FTSE 100 closed 78.26 points lower (1.09%) at 7,092.43.

On Wall Street all three main indexes reversed earlier losses to end the day higher. The Dow Jones and the Nasdaq both closed up 1.4%, while the S&P 500 gained 1.5%.

However, the Dow and S&P have both ended the week 5.2% lower – the biggest weekly declines for both since January 2016.

The Nasdaq only did slightly better, posting a 5.1% decline for the week.

It emerged today that British industry suffered its biggest fall since 2012 in December after the Forties oil pipeline was shutdown because of damage.

However, growth in manufacturing confirmed the broader picture of solid economic expansion at the end of 2017. Construction also showed a surprise surge in December, according to official data.

Britain’s economic growth slowed slightly in 2017 as higher inflation caused by the fall in sterling after the Brexit vote hurt consumers, but some exporters have gained from the weaker pound and the stronger global economy.

Industrial output fell by 1.3% month-on-month in December, the biggest drop since September 2012 after a 0.3 percent rise in November, the Office for National Statistics said.

Scottish exports higher

New figures showed that Scotch Whisky enjoyed a record-breaking year for exports in 2017.

According to official HMRC data, last year Scotch grew in both volume and value (by 1.6% and 8.9% respectively) to a total of £4.36bn – the equivalent of 1.23bn bottles exported globally. 

The figures come from the latest HMRC export data which showed that Scotch Whisky accounted for over 20% of all UK food and drink exports. There was further growth in exports of Single Malt Scotch Whisky, growing by 14.2% in 2017 to £1.17bn.

Salmon exports grew to £600 million in 2017, up 35% (£155.5 million) compared to 2016.

The figures also show that Europe continues to be the top export market for salmon and Scotch whisky in terms of both value and volume.

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