UK Economy Recovering Well

We were hot under the collar prior to a report released yesterday by the International Monetary Fund regarding the UK’s current economic policy however, it appears there was no need to be worried. The IMF has stated that no changes are required despite calls from much of the media and those effected by the tough monetary policy. A major concern this year surrounded our poor growth prospects and rising levels of inflation and though this is still a concern, the IMF stated they are expected and ‘temporary’. These comments have done little to strengthen sterling on the back of poor retail sales. Pound Sterling Sterling continued its decline against the euro for the sixth consecutive day after a report showed UK retail sales unexpectedly declined in May. The British Retail Consortium stated the fall was a result of customers’ ‘unwillingness’ to spend. The decline came in 2.1 percent lower than figures released this time last year. The collapse in retail figures does not come as a great surprise to those in the retail sector. At present, consumers are concerned about job security and their levels of income. Soaring inflation and government budget cuts are hurting consumer confidence and it has already been stated that it may take some time for the economy to recover. Dollar As if last weeks series of dire economic news wasn’t enough, this week is looking even worse. Barack Obama’s chief economist Austan Goolsbee resigned last night as he comically described the unexpected rise in unemployment levels as a ‘bump in the road’. Obama came to his defence stating that his close friend had actually created more jobs in his time at the White House. A baffling statement considering unemployment figures are actually increasing… All this has piled onto the fact that consumer confidence is low and the housing market is severely depressed. Where we can usually see some silver lining… Actually, forget that, the outlook is grim and investors are searching for a spot to gather good fortune for the US economy. Euro It appears Angela Merkel is confident the eurozone will overcome its current debt crisis. The German boss told Barack Obama and on the back of this the single currency climbed towards a one-month high against the majority of its major counterparts. European Central Bank President Jean-Claude Trichet also stated that he was to sanction bond rollovers in Greece. Other Currencies – Highlights Further afield, it appears the poor data surging out of the US is hurting Asian currencies. The main concern revolves around Asian exporters as poor US figures suggest the global recovery is faltering. Contrary to what was reported yesterday, the Reserve Bank of Australia has not only kept current rates on hold; they also stated that they have no plans to raise rates in the short term. On the back of this, the Australian Dollar lost ground against 15 of its 16 major counterparts. Current policy settings have been deemed ‘appropriate’ by the RBA.