British economy looks strong on the back of numerous positive reports
The British economy appears to be making great strides towards economic recovery, with numerous reports being released over the last few days suggesting that the climate is beginning to change. For example, Monday saw the announcement of a rise in finance sector jobs, rising in May by more than 20% when compared to the previous month.
Finance jobs in the capital have been hard to come by of late, with the 2008 financial crisis causing widespread redundancies and the various financial scandals which hit the banks over the last few years. The British finance sector currently employs more than one million people and accounts for 9 percent of the nation’s gross domestic product.
On the same day, some of those very same banks were told that the government is now ready to reprivatize them. The British government owns more than 80% of the Royal Bank of Scotland and just under 40% of Lloyds Banking Group. The shareholdings were picked up by the government during the fallout of the 2008 debt crisis, during which £66bn of taxpayers money was pumped into failing banks to ensure they did not collapse.
The case for a strengthening British economy was further supported today when it was announced that house prices had risen at their fastest rate in 36 months, as well as positive signs from the nations industrial sector, which has been downbeat for some time. With the economy growing by 0.3% in the first quarter and 0.6% in the previous three months, many analysts feel this could be the signs of genuine economic growth that the Bank of England has been hoping for.
Later this month Mark Carney will assume the position of governor at the Bank of England, replacing the outgoing Sir Mervyn King. Mr Carney had originally expected to be working with an extremely negative economy which would require further monetary stimulus to avoid a complete crash, however if these trends continue he may have an easier job than he had anticipated.
Investors will now need to assess the economic climate in Britain and assertain whether further economic stimulus will infact be on the cards with Carney at the helm, potentially bringing a whole new round “will they, won’t they” guessing games to the table as the Federal Reserve prepare for their vital announcement on their QE policy.