Andrew Sentance

Senior economic adviser at the accountancy group PwC and member of the Bank of England’s monetary policy committee (MPC), 2006-2011

Once again, we have passed through a month in which there has been a mix of economic news.

On the positive side, GDP rose by 0.7% in the three months to August, compared with the previous month. Wage growth has picked up to over 3% while inflation dropped back to 2.4% in September. Unemployment has fallen further and the official jobless rate remains at its lowest level for 43 years.

Even though retail sales dropped back in September, this appears to reflect monthly volatility. Over the past three months there has been healthy growth in the volume of spending in the retail sector.

Looking ahead, however, there are some more worrying indicators. The latest CBI industrial trends survey shows that manufacturers are now expecting orders and output to decline over the next few months – the weakest responses recorded since 2011. Optimism about export prospects is now at its lowest for six years. Investment intentions are now the weakest we have seen since the depths of the financial crisis nearly 10 years ago.

At the same time, industrialists appear to be struggling to find the skilled workers they need to fill vacancies. Skilled labour shortages are the highest recorded by the CBI since 1974.

Manufacturing industry is a key bellwether of the global economy – and is also one of the areas of the economy most likely to be affected by Brexit. The CBI industrial survey, which has been running for over 60 years now, has often proved an early warning indicator of more difficult economic times to come.

The UK stock market has also had a bad month. Uncertainty about the global economy, rising political risk at home and abroad, plus increased Brexit uncertainty, have hit UK equity prices hard. So despite some positive economic news over the summer, we may well see some harsher economic conditions as we move through the autumn and winter and into 2019.

The chancellor has a challenging job trying to lift the spirits of the business community next week. He will need to take some bold and imaginative moves which show he understands current business concerns and uncertainties, many of which are related to Brexit.

David Blanchflower

Professor of economics at Dartmouth College in the US and member of the Bank’s MPC from 2006 to 2009

Plunging stock markets around the world was the biggest news of the month as investors became spooked over the impact from the US Federal Reserve raising interest rates. The FTSE 100 dropped by more than 470 points, or by around 6.5%, on the month and is down more than 11% since May. My concern is that rising interest rates are going to cause a global slowdown. That is how most recoveries end.

UK investor morale has hit its lowest level in at least 23 years, including at the start of the great recession in 2008, according to financial services firm Hargreaves Lansdown. Its investor confidence index fell to 53 this month, from 58 in October – its lowest level since it began in 1993. It has averaged 92 over the last decade, but just 69 over the last 12 months. Brexit is the top issue worrying investors.

The CBI industrial trends report this week found that new orders at UK factories fell at the fastest pace in three years in the last quarter. Firms are more pessimistic about business prospects, particularly about their chances of selling goods abroad. Car company CEOs also continue to warn of the harsh consequences of Brexit for their businesses if a suitable Brexit deal isn’t negotiated.

In September, retail sales fell 0.8% as weak demand for food hit supermarkets and dragged down spending overall. Inflation dropped further than expected in September. The consumer price index dropped to 2.4% last month from 2.7% in August.

Unemployment rose and employment fell slightly on the month. Wage growth remained broadly flat. Real earnings in August 2018, as measured by average weekly earnings including bonuses at constant 2015 prices, were £492 – up £1 from two years earlier in August 2016 and down 6% since the start of recession.

The times, they are a-changin’ – but not for the better. This looks like a really good time for the chancellor, Philip Hammond, to end the failed austerity that has caused so much unnecessary pain and hardship.