18/04/2018 - Wage Growth Overcomes Brexit Inflation


British workers have seen their first real pay rise in a year, as average wage growth overcomes the fading inflationary effects of the Brexit vote. Average wages went up by 2.8% in February, Just above the 2.7% inflation rate printed in February, with the gap narrowing after a significant fall in real wages after the Brexit vote in 2016. Unemployment in the latest three-month period fell by 16,000 to 1.42 million, with the 4.2% unemployment rate the lowest since the three months to May 1975.The Bank of England has said it expects the fall in unemployment to start pushing up pay more quickly, which is the main reason why it has said it is likely to raise interest rates more quickly than it previously thought. The number of people in work has reached a record high of 32.2 million.

Britain’s upper house of parliament is expected to inflict an embarrassing defeat on Theresa May’s government on Wednesday, challenging her refusal to remain in a customs union with the European Union after Brexit.  That stance has widened divisions within the party and raised the prospect of a defeat in parliament’s upper House of Lords, where the Conservatives do not command a majority. The prime minister, said Britain will leave the EU’s single market and customs union after it quits the bloc next March so that London can negotiate its own free trade deals. Some Lords have indicated their support for an amendment to her Brexit blueprint, the EU withdrawal bill, which would require ministers to report what efforts they had made to secure a customs union by the end of October.


The International Monetary Fund warned on Tuesday that rising U.S.-China trade restrictions threaten to damage a steady global growth picture, but there was still time for the world’s two largest economies to step back from the brink. The IMF, in its latest World Economic Outlook, kept its global growth forecasts for both 2018 and 2019 unchanged at 3.9 percent after upgrades in January that were partly based on expectations of stronger U.S. spending spurred by tax cuts. But IMF chief economist Maurice Obstfeld said those effects will fade quickly, causing growth to slow if trade barriers are still in place.

Key Announcements

09:30 GBP: UK Consumer Price Index (YoY) Expected to be unchanged at 2.7%

10:00 EUR: Eurozone Consumer Price Index (YoY) Expected to be unchanged at 1.4%