Position: Short France (EWQ); Short Italy (EWI)
UK unemployment fell 10bps to 7.9% according to the latest reading from the International Labour Organization (ILO). While directionally the number is positive, the chart below points out that the rate has trended sideways for most of this year. Now PM Cameron and Co. must deliver on campaign promises to return growth to the UK economy, including greater improvements in employment. Already Cameron proposed 6 Billion Pounds in spending cuts for this year. Mark your calendar for next Tuesday, June 22nd, when the new Chancellor of the Exchequer George Osborne outlines the go-forward spending cuts in an emergency budget meeting.
Today, the Nationwide Building Society published its UK Consumer Confidence Index . Notably, May’s survey saw significant deterioration (below) which mirrors the slide in German consumer confidence that we saw yesterday in the ZEW survey. We believe this inflection is representative of heightened fears of the next European country to face sovereign debt default risk.
UK Consumer Confidence Index-
Index of Sentiment: 65 in May versus 75 in April
Expectations (6 months ahead): 93 in May versus 105 in April
Current Perception: 23 in May versus 29 in April
Propensity to Spend: held steady at 98