The data on Britain's economy continues to improve. The Confederation of British Industry's quarterly service-sector survey showed hotels, bars and restaurants notched up the fastest sales increase since 2007 in the three months to May. A Lloyds TSB survey found that consumer confidence is at a three-year high. Last week figures showed a drop in inflation to 2.4% in April. And Hometrack has reported a 0.4% increase in house prices in May, the fastest rise since 2007, driven by the southeast.
What the commentators said
"We shouldn't automatically expect improvements in sentiment to translate into improved consumer spending," said Lloyds' Patrick Foley. Employment fell marginally in the first quarter of 2013 compared to the previous three months. Wage growth is very weak, and still running behind inflation. In short, "the solid foundation of rising household incomes necessary for a long-run recovery in household spending remains lacking", said Capital Economics.
And with exports hardly likely to surge, given the subdued European and global backdrop, it's hard to see where growth will come from. As the IMF put it, Britain is still "a long way from a strong and sustainable recovery". On the other hand, we seem close to re-inflating the housing bubble, even though it barely deflated in the past few years: according to Nationwide, the average house still costs over six times the average salary.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Ministers "do not attempt to deny" that the government's new Help to Buy scheme "is a blatant attempt to drive up house prices", said Ross Clark in The Times. It may well give consumption a boost and prove popular. But it will leave taxpayers on the hook for risks the banks are not prepared to take, and put a few people on the housing ladder while pushing prices further out of reach for everyone else. Like Gordon Brown before him, Chancellor George Osborne "is putting politics before prudence".
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
-
What does Rachel Reeves’s plan for growth mean for UK investors?Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
