Friday, May 07, 2010
Hung parliament, policy headache
Posted by David Smith at 10:30 AM
Category: Thoughts and responses

Everybody was prepared for a hung parliament but this was about as well hung as it could have been. Labour and the Liberal Democrats together will not have enough seats combined for an overall majority and neither will the Conservatives with their allies in Northern Ireland. Sterling and gilts have suffered, though disentangling the UK election effect from the storms raging around the markets is not easy.

Meanwhile, life goes on. The Halifax reported a 0.1% drop in house prices for April, though they were 6.6% higher than a year earlier. Meanwhile, producer price data gave the Bank of England something to think about. To quote from the Office for National Statistics:

"Output price ‘factory gate’ annual inflation for all manufactured products rose 5.7% in April. Input price annual inflation rose 13.1% in April compared to a rise of 10.3% in March. Month on month the output prices measure for all manufactured products rose 1.4% in April, mainly reflecting price rises in other manufactured products, petroleum products and tobacco and alcohol products. The index excluding excise duties rose 1.3% between March and April.

"The ‘narrow’ output prices measure, which leaves out volatile sectors, showed an annual increase of 4.4%."