Economic commentary

• The developed world continues to experience strong growth, the balance of which is shifting towards Europe.
• UK exports are now responding well to growth abroad and are sustaining output growth here, albeit at a slower rate.
• German unification has important implications for resource flows there and creates further trading opportunities for other countries.
• Meanwhile, the previous policy tightening in the United Kingdom is continuing to establish a better balance between domestic supply and demand, with corporate as well as household spending now being constrained.
• Weakness in non-oil commodity prices is coming to an end but oil prices have fallen back.
• UK inflation is proving stubborn and in the short term the rate of growth of the RPI is expected to rise; it is important that domestic cost pressures are contained to limit damage to our competitiveness.

Economic commentary