UK: Deloitte Monday Briefing: An End-Of-Term Report For The UK Economy

Last Updated: 10 July 2014
Article by Ian Stewart

A personal take on economics from Ian Stewart, Deloitte's Chief Economist in the UK.

  • As the school term draws to an end how would an end-of-term report for the UK economy read?
  • The standout feature of the last year has been the sheer pace of growth. GDP has increased by 3.0% over the last year, making the UK one of the world's fastest-growing developed economies.
  • Activity is rebalancing away from finance and government. Output from the financial and insurance services sector, one of the super-growth sectors of the boom years, is in its sixth year of decline. Government spending is growing more slowly than GDP as the drive to reduce the public sector deficit continues.
  • Manufacturing has emerged in the last year as a significant driver of the recovery, with manufacturing output growth outpacing activity in the wider economy. The construction sector, which suffered two deep recessions in the last six years, is expanding strongly, helped by a surge in house building.
  • The UK's fastest growing sector is professional and business services. This sector accounts for 11% of GDP, more than manufacturing, and covers services provided to the other businesses - law, accountancy, architecture, consulting, scientific research and business support services such as employment agencies, call centres and office cleaning. Output growth here has risen by a heady 9.1% in the last year.
  • A surge in contracting-out by a value-conscious government has supported this growth. The Institute for Government estimates that government spending on outsourcing companies has risen by 23% in the last two years. More important, though, is the recovery in the wider corporate sector which is fuelling demand for professional and business services.
  • During the recession companies hunkered down, saving rather than investing or expanding, and became major providers of capital to the rest of the economy. Investment plummeted and the corporate sector financial surplus – a rough proxy for corporate saving – rose.
  • This is changing. In the last year business investment rose by 10.6%. In a sign of growing confidence, the corporate sector financial surplus is shrinking. Corporates are prioritising expansion over strengthening their balance sheets. A recovery in investment offers the prospect of a better balanced and more sustainable growth.
  • Like the best school reports, this one should combine praise for the things that are going right with a hard-headed assessment of the challenges ahead.
  • First, the bit all parents love, the positive news: "After a grim few years the UK is doing far better than any of us expected and far better than its peers. We are seeing welcome strength in investment, manufacturing and construction. The squeeze on government spending has not, as many feared, prevented a private-sector recovery. Companies feel less need to strengthen their balance sheets and are hiring and investing. Low inflation and rapidly falling unemployment are bolstering consumer spending power".
  • The less palatable bit of the report might read as follows, "Yet some of the UK's familiar problems have re-surfaced: the housing market is showing signs of excess; productivity, or output per person, has remained weak, as has the UK's trade performance; investment is way below its long-term levels and consumer incomes are still falling. This recovery is strong, but its sustainability will depend on how the UK deals with these challenges".


UK's FTSE 100 ended the week down 0.9%.

Here are some recent news stories that caught our eye as reflecting key economic themes:


  • UK business investment rose at an annual rate of 10.6% in Q1 2014, the fifth consecutive quarter of growth
  • Mark Carney, the governor of the Bank of England, said people should focus on a medium-term "new normal" of interest rates around 2.5%
  • The Bank of England introduced a cap on mortgages – with no more than 15% of banks' lending to be more than 4.5 times incomes
  • New Purchasing Managers Index (PMI) data for Europe showed growth in Germany and France slowing, whilst growth in 'peripheral' Europe is at its strongest since August 2007
  • Police in Greece discovered and broke up a fraudulent lottery which made €36m by selling fake online lottery cards to around 360,000 Germans
  • Japanese Prime Minister Shinzo Abe unveiled more of his 'third arrow' of structural reforms for the Japanese economy, including slashing the country's corporate tax rate
  • The number of freelancing mothers in the UK has risen by 24% in the past 2 years, with many citing the need for more flexible hours according to research published think-tank Demos
  • China's chief auditor discovered 94.4bn yuan ($15.2bn) of loans backed by falsified gold transactions
  • Dodo Pizza, a Russian pizza chain, claims that it successfully delivered a pizza by drone, saying that they intend to use drones to deliver pizzas to open-air areas including parks
  • The London Metal Exchange (LME) announced that it will keep its open-outcry trading ring, the only European financial market to still use one
  • India is the world's most entrepreneurial country according to a ranking of 33 countries by Oracle Capital Group, scoring strongly on the ability to set up a business quickly and cheaply
  • Nearly half of Americans say that poverty is caused by circumstances beyond individual control according to a NBC News/Wall Street Journal poll, compared to a third who thought the same in 1995
  • Ghana's president John Dramani Mahama dispatched a plane with more than £1.7m in cash to Brazil to pay their World Cup squad after a protest over unpaid fees
  • An index created by a Yale economist, where a country's passion for football is multiplied by its average level of poverty multiplied by its population, predicts victory for Nigeria would bring the most aggregate happiness
  • Toymaker Mattel is to launch 'Entrepreneur Barbie' this summer – a doll with her own smartphone, tablet computer and Linkedin page – to correspond with the rise of female-owned businesses in the real economy – the plastic ceiling

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions