1. Economic Outlook – January 2012 Glynn Jones, Bank of England West Midlands Agency

3. November GDP projections revised downwards (1) 1) based on market interest rate expectations and £275 billion asset purchases

4. West Midlands Agency Global Outlook

5. West Midlands Agency Survey measures of global output growth indicate slowing, especially in Eurozone

6. West Midlands Agency Selected European ten-year government bond spreads over German government bond yields

7. West Midlands Agency Net Trade as a percentage of GDP shows some improvement ……

8. West Midlands Agency Domestic Outlook

9. West Midlands Agency And UK business and (especially) consumer confidence weakening

10. West Midlands Agency Levels of consumption are falling as consumers see real income squeezed

11. West Midlands Agency Investment & employment intentions are weakening

12. West Midlands Agency Public sector net borrowing will continue to fall

13. West Midlands Agency More generally, contacts report credit conditions tightening...... Loans to UK businesses by size Availability of funds has tightened Small firms most affected Concern about future credit availability Forbearance remains high Modest pick up in receiverships

14. West Midlands Agency Private sector employment intentions positive, public sector cuts key driver of weak Q3 figures Quite strong evidence to suggest that cuts to headcount have been front loaded Frequent references to cuts to staff being enacted over the first two or three years of the programme Incentive for early cuts, as grant is slightly larger

15. West Midlands Agency Inflation Outlook

16. West Midlands Agency Consumer price inflation currently high...... -3 -2 0 1 2 3 4 5 6 7 20072008200920102011 CPI RPIX RPI Percentage change on a year earlier

17. West Midlands Agency But expected to fall as VAT falls out of calculation Direct contribution of energy prices to CPI inflation and estimate of VAT contribution

18. West Midlands Agency 1) based on market interest rate expectations and £275 billion asset purchases November projection of annual CPI inflation indicates sharp fall (1)

19. West Midlands Agency In light of weak outlook MPC launch further round of QE Stylised transmission mechanism for asset purchases

20. West Midlands Agency Regional Economic Outlook

21. West Midlands Agency As manufacturing output growth continues, albeit there are now some signs of slowing

22. West Midlands Agency However, PMI shows activity in the West Midlands continues to increase at a solid pace

23. West Midlands Agency From 2000-2007 average annual growth in GVA in the WM has been slowest of any UK region

24. West Midlands Agency The region’s skills base limits productivity and the development of knowledge-sectors

25. West Midlands Agency Summary

26. West Midlands Agency www.bankofengland.co.uk