The Monday note - 11 June 2018

• The FTSE 100 index closed on Friday at 7,681.1, down 26 points on a week earlier in a relatively flat week for the market. The ten year Gilt yield softened to 1.39%. 
• The UK services PMI index increased to 54.0 in May, up from 52.8 in April – a reading of over 50 suggests growth. This is consistent with stronger PMI readings for manufacturing and construction recently. 
• The Transport Secretary announced a £14 billion project to build a third runway at Heathrow airport by 2026. The extra runway will increase flight numbers by 54%, and “create tens of thousands of local jobs”. 
• European insurance shares slid on news that Amazon is considering adding home insurance to their services. In contrast, shares for Europe’s tech firms hit a 17 year high last week.

Chief Economist comments: 

The evidence continues to build that the digital economy is expanding into ever new areas of life, and achieving substantial growth along the way. Amazon is on course to create 2,500 new jobs in Britain this year. This focuses attention on what can be an Achilles heel for the UK, namely access to skilled labour. Our unemployment rate is low, we have relied heavily on immigration to fill gaps, but Brexit is set to end freedom of movement. It is good to see the government put the national interest first with the Heathrow decision last week. The same needs to happen on skilled migration in order to support growth industries, and key public services.