- Economic news was even less summery than the weather. Against the backdrop of a huge drop in the value of financial markets, there were reports that 40% of households saw their finances deteriorate compared to the previous month. A study by Crisis indicated that the number of people being placed into temporary accomodation had increased by 14% over the previous year. In justifying their decision to maintain interest rates at 0.5% despite above-target inflation, the Bank of England referred to ‘the slowing in world demand growth and the heightened tensions in financial markets’, underlining the likelihood that growth will remain constrained for much of the rest of the year at least.

- More positively, it was reported that the number of young people studying STEM (Science, Technology, Engineering or Mathematics) subjects had increased. Since 2005 the number of young people taking A-Level maths has increased by 57%, whilst science subjects have seen a 17% increase over the same period.

- However, the full implications of the increase in tuition fees were outlined in the Push Student Debt Survey, which revealed that students who start at university this year face an average debt on graduation of £26,100 whilst those that start next year will graduate with an average £53,400 of debt.

- The increase in student debt supports the view of the Resolution Foundation which this month stated that ‘low-to-middle income households are likely to be shut out of home ownership for a lifetime’ due to increasing prices relative to incomes and the difficulty of saving for a deposit.

- Two reports highlighted the divergence amongst digital access in the UK. Firstly, the telephone regulator Ofcom reported that almost a third of UK adults now has a smartphone. Secondly, an LSE report highlighted the emergence of a digital underclass, with ONS figures showing that 8.7m UK adults had never used the internet.

- In addition to doom and gloom there were some more positive news and statistics. The value of cycling to the UK economy was estimated at nearly £3bn, highlighting the value that can be created through encouraging a move towards more sustainable transport solutions. Also, the government announced that it had accepted all 10 recommendations from the Hargreaves review into  intellectual property, which is expected to have a potential benefit to the UK economy of £7.9bn.

The news means that growth expectations for 2011 have fallen from the 1.7% projected by the Office for Budgetary Responsibility (OBR) in March to approximately 1.3% according to some private sector forecasters. There have been some suggestions that the UK could lose its AAA credit rating, which would make borrowing more costly, echoing warnings earlier in the year that the UK economy was growing too slowly.

Despite continued slow growth and calls for a ‘Plan B’ for the economy, there seems little likelihood of a change in policy by the government, with both the Prime Minster and the Chancellor indicating that current policies would continue. The announcement today of 7,000 further job cuts at the MoD underlines the government’s commitment to spending cuts.

Where does this leave the UK economy? A recent IMF working paper reviewing the impact of public sector austerity on economic growth has found that cutting a country’s budget deficit by 1% of GDP typically reduces real output by about two-thirds of a percentage point and raises the unemployment rate by one-third of a percentage point. We should therefore expect continued public sector austerity to be a drag on growth.

A major influence on UK growth will be the health of the global economy. Relatively good growth in developing countries is being undermined by the twin risks of the collapse of the Euro, only partly assuaged by the recent Greek debt deal, and the ongoing US debt crisis. A recent report by Oxford Economics suggested that fears of a Japan-style ‘lost decade’ for advanced economies were overstated but that recovery will be ‘relatively bumpy and muted compared to recent historical experience.’

The most recent OBR forecasts published in March 2011 suggested that the economy would grow by 1.7% in 2011 before increasing to 2.5% in 2012 and then 2.9% in 2013. It is likely that growth will remain subdued for the remainder of the year, and lower than expected. Assuming that neither of the two big global economic risks occur – and this is far from certain – then it is likely that growth going forward will be uneven but positive.

For local authorities this means that efforts to support local demand and employment will remain vital to the health of local economies. Unemployment, wage erosion due to inflation, and high levels of household debt are all factors weighing on local communities and individual households. LEPs and local authorities will therefore have a large role to play in supporting the emergence and growth of sectors which will drive employment growth over the next decade, and so underpin the economic sustainability of local communities.

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This report, published recently by the Fabian Society on behalf of the TUC, finds that owner occupiers do not benefit from the ability to move in response to labour market pressures that is assumed by government policy. The report provides some interesting statistics on owner occupation. For the working age population: 13% of households in poverty own their property outright, 27% have a mortgage, 27% live in social rented housing and 33% in private rented housing. According to the analysis, 2.1 million working age individuals living in poverty live in owner-occupied housing, compared to 2.6 million working-age people living in poverty who are social tenants.

The report illustrates that for those living in poverty, owner occupation has not necessarily been a significant advantage, and indeed can lead to a lack of labour market mobility both when the housing market is overheated, and during downturns. Indeed there is a similarity in the residential mobility rates of mortgaged owner-occupiers and social tenants. Depressed house prices can be part of a vicious circle where low employment keeps prices down, which reduces the mobility of home owners to move.

Tackling this problem had been one of the objectives of the Housing Market Renewal Pathfinder programme, which is of course now ceasing. Therefore the report suggests a continuing need for connection between economic/labour market policy and housing policy. Specifically, in addition to increasing supply and other measures, greater mobility between tenures should be promoted, along with mechanisms to facilitate equity release from owner-occupied housing. Moreover, some of the financial and debt advisory support provided to social housing tenants could also usefully be provided to owner occupiers in deprived areas.

This suggests that local authorities, in developing their housing, employment and anti-poverty strategies, should include an assessment of the needs of owner occupiers in poverty. Local authorities should also consider including mechanisms to help this group to move and to improve their properties, as well as more general measures to reduce local labour market immobility.

Local authorities should also look at local housing options for the local workforce, today and in the future, and identify ways in which greater flexibility and movement between sectors can be promoted through housing strategies.

- There were two reports exploring the impact of global climate change on the UK. Firstly, BIS’s Foresight Programme released a report on the challenges to the UK of climate change over the next 30 years. The core message of the report is that ‘the consequences for the UK of climate change occurring in other parts of the world could be as important as climate change directly affecting these shores.’ These risks occur through the potential for increased international stability, increased financial and business risks, disruptions to resources and impacts on global health.

- Secondly, and with a greater focus on the impacts within the UK, the Adaptation Sub-Committee released its Progress Report for 2011. Key areas of concern include the expectation that areas at risk from severe drought will increase from 8% currently to 45% in 2035. The report also found that development in areas at flood risk and in areas of coastal erosion has increased since 2001, increasing vulnerabilities in some areas.

- This week also saw the release of the Office for Budgetary Responsibility’s (OBR) Fiscal Sustainability Report. The report suggests that the UK’s ageing population will continue the need for public spending ‘austerity’ in the future. At the same time, projected declines in transport taxes and North Sea oil revenues will necessitate finding replacement sources of revenue.

- The continuing importance of skills and training was emphasised as the CBI reported that ’42% of employers are not satisfied with the basic reading and writing skills of school and college leavers and almost half have had to invest in remedial training to get their staff’s skills up to scratch.’

- LSL’s Property Services’ Buy-to-let Index reported that UK annual rent inflation is running at 4.1%, and in London annual rent inflation is 6.9%. This could have important implications in the context of the changes to the affordable rent.

- NHS data for May has shown that more patients are waiting more than 18 weeks for treatment.

- A Macmillan study has suggested that the number of people in the UK living with cancer will double from 2 million to 4 million over the next 20 years, as a result of increasing numbers of people getting cancer and better treatments which increase survival rates and prolong lifespan.

-  The government announced that it had received 29 bids for second round Enterprise Zone status. The government will choose 10 of these bids as Enterprise Zones. Enterprise Zones have a number of incentives to drive investment, including business rates discounts over five years. LEPs will also be able to retain the business rates uplift within the Enterprise Zone locally, giving them a vital tool for forward funding of infrastructure.

- Croydon moved a step closer to implementing a sweeping new vision for the area. Council chiefs unveiled a 20 year vision which will see the transformation of the town centre, including 8,000 new homes.

This week also saw a number of publications on the current state of the economy and future prospects for growth.

- Oxford Economics published an analysis of the prospects for the global economy which concluded that the prospects for muted growth continue, but the chances of a Japan-style ‘lost decade’ was unlikely.

- Centre for Cities published a report on the changing geography of employment in the UK. The report finds that higher skilled jobs are increasingly concentrating within cities, along primary transport corridors and within city centres. By contrast, lower skilled jobs are increasingly moving out of cities. This has important implications for labour mobility amongst lower skilled workers.

- The Joseph Rowntree Foundation published its report on the UK minimum income standard. The report finds that for families with children, the cost of living has risen faster than income.

- 24.2% of adults have volunteered during the last year, unchanged from previous years.

- A greater proportion of 16-24 year olds had volunteered than those in the 25-44 year old age group, and women were more likely to volunteer than men.

- Between 2005/06 and 2010/11, there was an increase in the proportion of Black or minority ethnic people volunteering from 19.6% to 23.5%.

- Between 2005/06 and 2010/11, the proportion of people visiting a museum, gallery or archive in the last year increased from 42.3% to 47.5%.

- Over the same period, the proportion of people using a public library declined from 48.2% to 39.7%.

- Between 2005/06 and 2010/11 there was an increase in the proportion of people visiting museum and gallery websites from 15.8% to 25.0%.

- However, across the same period the proportion looking at online collections fell from 33.7% to 22.3%.

- This blog by the Economist talks about the end of hotel check-in staff. The same broad conclusions could be made about a number of other service sector occupations. As technology improves, the scope for replacement of labour increases, with important implications for local economies.

- Building Futures published their analysis of the future for architects and architectural firms over the next 10-15 years.

This week also saw a number of innovation investment stories:

- Google announced that they were launching a $280m fund for investing in solar energy.

- The Technology Strategy Board launched their new strategy for business innovation to 2015. The strategy aims to support businesses to prioritise investment in innovation.

Lastly, the prognosis for the global economy seems to have worsened recently. This Economist article and this FT article discuss the increasing likelihood of economic slowdown and depressed growth over the medium term.

- A survey commissioned by Interserve found that 40% of councils do not have a strategy for achieving their required spending cuts by 2014. Furthermore, 25% of councils did not expect to meet their 2014 spending targets. This highlights a continued need for councils to be proactive about spending decisions and service re-design.

- The same survey found that councils were looking to increase the proportion of services they outsource from 20% in 2011 to 32% in 2014. This will clearly have important implications for how councils are organised and how they commission and manage service contracts.

- A timely reminder of the importance of effective transition was provided by this Guardian report, which highlighted the life-expectancy gaps between different areas of the UK, illustrating the continued importance of regional and local inequalities.

There were also a number of stories on the future economy this week:

- Oxford Economics released a new report on the future of the digital economy. They find several important trends that are emerging as a result of new business processes. These include significant transformations in business processes in sectors such as media, entertainment, banking, retail and healthcare. The report also finds that businesses in emerging economies are investing heavily in technology and in some cases are outpacing their developed country counterparts.

- At the same time, PWC issued a paper questioning the value of technology firms and asking whether we are seeing a bubble in stock values. This is an important consideration given the ambitions in the UK for technology clusters such as Silicon Roundabout.

- An article on Grist.org provided a timely reminder of the declining cost of solar power. Solar PV costs fell from $60 per watt in the mid-1970′s to $1.50 per watt today. This has led to some commentators suggesting that there is a Moore’s Law for solar energy. By 2020, the article predicts that solar power will be cheaper than new nuclear and coal plants. The article also points out that the equivalent of 17 nuclear plants worth of solar energy, equivalent to 17GW, was installed last year worldwide.

- At the same time, PWC issued a report on the progress towards 100% energy production from renewable sources in Europe. The report is cautiously optimistic, citing good technological progress and generally good political leadership, whilst also highlighting planning regulations as a continued barrier to growth.

- On an international front, this week saw the unwelcome news that global greenhouse gas emissions had risen to record highs.

- This bad news was compounded by a report by Oxfam which suggested that world food prices are likely to more than double to 2030.

- Closer to home, the Halifax reported the rise of ‘Generation Rent’, the growing proportion of young people locked out of home ownership.

- More positive news came in the form of new reports from the digital economy, with Cisco predicting that the number of internet-connected devices would jump massively to over 15 billion by 2015 – promising a new era of digital interconnectedness.

- Gigaom posted an interesting article suggesting that sharing might be becoming more and more mainstream.

- Lastly, the UK National Ecology Assessment (NEA) was released this week. The NEA points the way to a new era of assessment based on an understanding of the value of natural wealth.