IHS Markit/CIPS Flash PMIs (Sep.)

The small fall in the composite activity PMI in September indicates that the economy lost a little more momentum. But at the same time, there were clear signs that price pressures have continued to pick up. While it is difficult to know which the Bank of England will choose to put more weight on, our view is that the Monetary Policy Committee (MPC) won’t rush to raise interest rates.
Bethany Beckett UK Economist
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UK Data Response

Public Finances (Dec.)

Stronger tax revenues were just enough to offset big rises in debt interest costs in December. But we don’t expect this to last: further rises in inflation will mean borrowing soon overshoots the OBR’s forecast. Even so, our forecasts suggest the Chancellor still has enough fiscal space to cancel April’s rise in NIC taxes. Drop-In (14:00 GMT, 26th Jan): UK Outlook -- More inflation, more interest rate hikes. Join our UK Economics team for a briefing on the 2022 outlook, including why we’re below consensus on growth but think the BoE will raise rates more than most expect. Register here.

25 January 2022

UK Data Response

IHS Markit/CIPS Flash PMIs (Jan.)

The third consecutive decline in the composite PMI indicates that the Omicron variant weighed further on activity in January. But the recent fall in COVID-19 cases, relaxation of restrictions and signs of easing supply shortages suggest the economy will recover quickly. And, given signs of accelerating price pressures, we still expect the Bank of England to hike interest rates a week on Thursday. Drop-In (14:00 GMT, 26th Jan): UK Outlook -- More inflation, more interest rate hikes. Join our UK Economics team for a briefing on the 2022 outlook, including why we’re below consensus on growth but think the BoE will raise rates more than most expect. Register here.  

24 January 2022

UK Economics Weekly

Economy less favourable for whoever’s in Number 10

Although it is hard to predict whether by the end of next week Boris Johnson’s reign as Prime Minister will be solidifying or crumbling, we know that whoever is in Number 10 over the next year will have to deal with the cost of living crisis. Our forecast that inflation will rise to a little above 7% explains why we think GDP growth this year will fall short of the consensus forecast and why we think interest rates will be raised further than most expect, from 0.25% now to 1.25% by the end of the year. Drop-In (14:00 GMT, 26th Jan): UK Outlook -- More inflation, more interest rate hikes. Join our UK Economics team for a briefing on the 2022 outlook, including why we’re below consensus on growth but think the BoE will raise rates more than most expect. Register here.

21 January 2022

More from Bethany Beckett

UK Economics Update

Inflation to fall sharply in 2022 despite higher utility prices

Given the recent surge in wholesale gas and electricity prices to record highs, it looks likely that Ofgem will opt for another chunky hike to the price cap on households’ utility bills next April. While this will hit household real incomes, it doesn’t change our view that inflation is set to drop back sharply next year.

17 September 2021

Capital Daily

Post-payrolls jump in Treasury yields likely to continue

While the jump in the 10-year Treasury yield following the surprisingly weak August non-farm payrolls report is somewhat counterintuitive, we still expect bond yields to rise further.

3 September 2021

Capital Daily

OPEC+, oil prices and two implications for financial markets

Although yesterday’s decision by OPEC+ to stick to its planned output increases didn’t cause a big reaction in global financial markets, we still expect the price of oil to decline over the next couple of years. This is because we expect that a steady increase in global oil supply will outweigh the recovery in demand. In our view, this would have two main implications for financial markets more generally.

2 September 2021
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