Economic Indicators, August 2015

This month’s developments

Summer Budget 2015

The Chancellor made a number of announcements in the first Budget of the current Parliament, including a National Living Wage, £12 billion of welfare savings by 2019/20 and £5 billion of savings made by tackling aggressive tax avoidance and evasion by 2019/20.

Further information is available in the Library Briefing Paper, Summer Budget 2015: A summary.

Greek debt crisis

On the weekend of 11-12 July Greece and the other 18 Eurozone countries came to a provisional agreement to start talks on a third bailout programme for Greece which could total up to €86 billion (£60 billion) over three years. Formal negotiations have now begun on the specific conditions attached to the proposed loan. No money will be distributed from this programme until a full legal agreement has been reached. This will take at least a few weeks, possibly longer.

Further information is available in the Library Briefing Paper, Greek debt crisis: background and developments in 2015.

Growth and Output

GDP grew by 0.7% in Q2 2015, in real terms, compared to Q1 2015. The OBR forecasts that GDP will grow by 2.4% in 2015.

Prices and Wages

Average employee pay excluding bonuses saw the highest annual growth rate since the three months to February 2009, increasing by 2.8% in the year to March-May 2015 2015.

Inflation remains low, the CPI inflation rate was 0.0% in June, down from 0.1% the previous month.

Labour Market

1.85 million people were unemployed in March-May 2015, 15,000 more than the previous quarter, the first quarterly increase since January-March 2013.  Unemployment is down 273,000 on last year.

Finance and Borrowing

Interest rates in the UK, Eurozone and US remain at historic lows. The Bank of England has left the Base Rate in the UK unchanged at 0.5% since March 2009 – the lowest since it was founded in 1694.

Trade and Exchange Rates

Sterling was down 0.1% against the Dollar in July compared to June. Over the same period the Sterling was also down 0.1% against the Euro, but remains 12.1% up against the Euro compared to last year.

Other indicators

Retail sales have seen the longest period of sustained growth since consistent records began in June 1996. Quantity bought grew for the 28^th consecutive month.