BoE Watch When the fog clears more stimulus will be required The initial recovery has been encouraging, but the downside risks remain. We think much more support will eventually be needed in the form of a further £250bn of QE in total (the consensus is £100bn... 10th September 2020 · 8 mins read
UK Economics Chart Pack Entering a harder phase of the recovery Our Capital Economics BICS Indicator suggests that the rapid economic recovery has continued with some chunky gains in GDP in both July and August. (See Chart 1.) If so, then the economy may now be... 8th September 2020 · 9 mins read
UK Data Response Money & Credit (Jul.) July’s money and credit data confirm the resurgence in the housing market while recovering consumer credit suggests that households’ appetite for big ticket purchases is returning. 1st September 2020 · 2 mins read
UK Economics Weekly The consequences of the pandemic for inflation The surprise rise in CPI inflation in July highlights that the effects of the pandemic will not only be deflationary. The hit to supply from the pandemic combined with shifting spending patterns may... 21st August 2020 · 4 mins read
UK Data Response Public Finances (Jul.) July saw the fourth biggest monthly deficit in history behind only the first three months of this fiscal year. A massive increase in debt to over £2 trillion for the first time ever and above 100% of... 21st August 2020 · 3 mins read
UK Economics Update Quarantine is not the source of the tourism industry’s woes The sudden imposition of quarantine on people arriving from France highlights the risks involved in foreign travel while the virus is still circulating. This uncertainty is likely to mean it takes a... 19th August 2020 · 4 mins read
UK Markets Outlook Time to shine UK assets may outperform overseas assets over the next year or two even though the UK’s economic recovery from the coronavirus crisis may take longer. We think that a larger expansion in the Bank of... 13th August 2020 · 13 mins read
UK Economics Chart Pack UK bringing up the rear The large share of consumer-facing services in the UK economy, combined with a deeper and longer lockdown than most other developed economies meant that the UK was always going to be hit harder than... 5th August 2020 · 9 mins read
UK Economics Weekly Policymakers start to withdraw support August marks the beginning of the phasing out of the extraordinary policy support that has seen the economy through the coronavirus crisis so far. The winding down of the furlough scheme while... 31st July 2020 · 4 mins read
UK Economics Update A better way to measure the recovery? A new type of recession requires new tools to measure it. It has become clear that the activity PMIs will be of little use in gauging the extent and pace of the recovery from the coronavirus crisis... 27th July 2020 · 3 mins read
UK Data Response IHS Markit/CIPS Flash PMIs (Jul.) The surge in the composite PMI to 57.1 in July is an encouraging sign of further recovery, but it is not an indication that GDP has recovered to its pre-virus level. We don’t expect that to happen... 24th July 2020 · 3 mins read
UK Economics Update Recovery in business investment will lag the rest of the recovery The coronavirus crisis is a new type of recession, but all the normal reasons why business investment recovers slowly from downturns still apply and the uncertainty about Brexit is an additional drag... 23rd July 2020 · 3 mins read
UK Markets Chart Pack Loose monetary policy to anchor gilt yields for years Despite the Bank of England having slowed the pace of its gilt purchases to below that of gilt issuance (see Chart 1), our forecasts that it will expand the size of its quantitative easing programme... 22nd July 2020 · 8 mins read
UK Economic Outlook Lagging behind in the recovery race The combination of a large share of the UK’s GDP being generated by the sectors that are hampered the most by social distancing and the drag from the uncertainty caused by Brexit means the UK economy... 20th July 2020 · 26 mins read
UK Data Response Labour Market (May/Jun.) The smaller-than-expected fall in employment in May and evidence that the first wave of joblessness in the coronavirus crisis ended in June shows that the furlough scheme has been effective in... 16th July 2020 · 3 mins read
UK Economics Update BoE can push up the money supply but not inflation A surge in the money supply has piqued fears of a leap in inflation. But in our view, there is little chance that this expansion of the money supply, driven almost entirely by quantitative easing... 9th July 2020 · 4 mins read
