1. Presentation to Cornwall Council Private Developers Forum 2 nd March 2012 Geoff Harding Deputy Agent for South West England

2. South West Agency Overview

3. South West Agency Quarterly figures: 2011 Q1 0.3 % Q2 0.0 Q3 0.5 Q4 -0.2 Annual: 0.8 %

4. South West Agency GDP projection based on market interest rate expectations and £325 billion asset purchases

5. South West Agency Projection of the level of GDP based on market interest rate expectations and £325 billion asset purchases

6. South West Agency Bank rate and forward market interest rates Sources : Bank of England and Bloomberg.

7. South West Agency Conditioning path for Bank Rate implied by forward market interest rates (a)

8. South West Agency Survey measures of capacity utilisation Sources: Bank of England, BCC, CBI, CBI/PwC and ONS.

9. South West Agency Unemployment rates Source: ONS (including Labour Force Survey).

10. South West Agency Self-employment (a) Source: Labour Force Survey.

11. South West Agency Broad money (a)

12. South West Agency The construction sector – recent history

13. South West Agency

14. to Q4 2011, at constant 2005 prices

15. South West Agency

19. Prospects

20. South West Agency Contributions of expenditure components to changes in demand in recessions and recoveries

21. South West Agency Household consumption and real income

22. South West Agency Survey measures of household expectations Source: Research carried out by GfK NOP on behalf of the European Commission.

23. South West Agency Household saving ratio

24. South West Agency CPI Inflation projection based on market interest rate expectations and £325 billion asset purchases

25. South West Agency Direct contribution of energy prices to CPI inflation and Bank staff’s central estimate of VAT contribution Sources: Bloomberg, Department of Energy and Climate Change, ONS and Bank calculations.

26. South West Agency Contributions to CPI inflation

27. South West Agency US dollar oil and commodity prices Sources: Bloomberg, S&P indices and Thomson Reuters Datastream.

28. South West Agency Inflation expectations for a year ahead Sources: Bank of England, CBI (all rights reserved), Citigroup, ONS and YouGov.

29. South West Agency Public sector net borrowing (a) Sources: HM Treasury, OBR Economic and Fiscal Outlooks (EFO) and ONS.

30. South West Agency Business investment and surveys of investment intentions Sources: Bank of England, BCC, CBI, CBI/PwC and ONS

31. South West Agency Factors likely to hold back investment Sources: CBI, CBI/PwC and ONS.

32. South West Agency Credit conditions

33. South West Agency Loans to individuals and private non-financial corporations

34. South West Agency Lending to small and medium-sized enterprises (a) Sources: Bank of England, BBA, BIS and Bank calculations.

35. South West Agency Net funds raised by UK businesses (a)(b) Sources: Bank of England, BBA, BIS and Bank calculations.

36. South West Agency UK banks’ leverage

37. South West Agency UK banks’ indicative longer-term funding spreads Sources: Bank of England, JPMorgan Chase & Co., Markit Group Limited and Bank calculations.

38. South West Agency Credit Conditions Survey: spreads over reference rates on lending to corporates by firm size (a)(b)

39. South West Agency Stock of lending to UK PNFCs (a)(b) Source: Bank of England.

40. South West Agency Credit Conditions Survey: availability of credit to households (a)

41. South West Agency Bank Rate and average quoted interest rates on new household borrowing

42. South West Agency Mortgage lending by the major UK lenders (a)

43. South West Agency SUMMARY Growth outlook: a pick-up in 2012 H2, driven by better prospects for consumption as inflation comes down and real incomes stop falling Factors such as the Diamond Jubilee and the Olympics will disrupt the pattern of demand. Uncertainties remain regarding the household savings rate Increased uncertainty is holding back investment, but a pick-up in consumption should have ‘accelerator’ effects. Other components of demand – Government, net trade, stock building -- will be negative or flat at best. Inflation has begun its long-promised fall as temporary factors unwind. The risk that inflation will fall below target with continuing slack in the economy is being mitigated by the increase in QE.

44. Presentation to Cornwall Council Private Developers Forum 2 nd March 2012 Geoff Harding Deputy Agent for South West England

45. South West Agency Real house prices following banking crises Sources: OECD and Bank calculations.

46. South West Agency Chart 1.10 UK banks’ indicative longer-term funding spreads Sources: Bank of England, JPMorgan Chase & Co., Markit Group Limited and Bank calculations.

47. South West Agency Chart 1.14 Credit Conditions Survey: spreads on corporate loans by company size (a)

48. South West Agency Table 1.B Housing market indicators Sources: Bank of England, Department for Communities and Local Government, Halifax, HM Revenue and Customs, Land Registry, Nationwide, Royal Institute of Chartered Surveyors (RICS) and Bank calculations.

49. South West Agency Chart A Housing transactions and house building Sources: Department for Communities and Local Government, HMRC, ONS and Bank calculations.

50. South West Agency Chart 2.8 Survey measures of global output growth (a) Sources: HSBC, JPMorgan Chase & Co., Markit Economics, Thomson Reuters Datastream, US Bureau of Economic Analysis and US Institute for Supply Management (ISM).

51. South West Agency Table 2.D Euro-area survey measures of confidence and bank credit conditions Sources: ECB and European Commission.

52. South West Agency Indicative median interest rates on new SME variable-rate facilities (a) Sources: Bank of England, BIS and Bank calculations.