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Labour Market (Feb./Mar.)

The latest batch of data brought some signs of a softening in labour demand, but with the unemployment rate having fallen to pre-COVID levels, job vacancies at a record high and wage growth rising, the labour market is very tight. So, even though real wages are now falling and will decline further, we still expect the Bank of England to raise interest rates from 0.75% to 1.00% on 5th May and to 2.00% next year.
Ruth Gregory Senior UK Economist
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UK Data Response

Labour Market (Jun/Jul.)

June’s labour market figures revealed further evidence that the weaker economy is leading to a slightly less tight labour market. That said, by any metric the labour market is still exceptionally tight. And the robust rise in employment in June together with the leap in earnings growth will heap pressure on the Bank of England to raise interest rates by 50 basis points rather than 25 basis points at the next policy meeting on 15th September.

16 August 2022

UK Economics Weekly

Risk of a bigger and longer-lasting squeeze on real incomes

The prospect of a bigger rise in utility prices in October and in the first half of 2023 means the risks to our forecast for CPI inflation to rise from June's 40-year high of 9.4% to a peak of 12.5% in October are skewed to the upside. This increases the risk of a bigger and longer-lasting squeeze on households' real incomes and supports our view that consumer spending will be at the epicentre of a recession in 2022/23.  

12 August 2022

UK Data Response

GDP (Jun. & Q2)

The 0.6% m/m drop in GDP in June was mostly due to the adverse effect of the extra Jubilee bank holiday. Even so, the GDP figures confirmed that the economy contracted by 0.1% q/q in Q2 as a whole and we have not altered our view that a recession is on the way later this year.

12 August 2022

More from Ruth Gregory

UK Data Response

GDP & International Trade (Feb.)

The news that the economy was hardly growing at all in February suggests the economy had a little less momentum in Q1 than we had previously thought, and increases the risk of a contraction in GDP in the coming months as the squeeze on household real incomes intensifies.

11 April 2022

UK Economics Weekly

Shift towards higher taxes and spending is here to stay

Far from reducing the tax burden, the Chancellor is set to preside over the biggest tax share of GDP since 1949 under Clement Attlee's post-war Labour government. So if Rishi Sunak wants to be remembered as a tax-cutting Chancellor, he seems to be going in the wrong direction! As a result, it is clear that some of the shift towards a bigger state after the pandemic is here to stay.

25 March 2022

UK Economics Update

Spring Fiscal Statement 2022 Checklist

We are resending this checklist so clients can have it to hand ahead of today’s Spring Statement. It is designed to help clients keep track of the key economic and public finances forecasts announced during the Chancellor’s Spring Statement speech at 12.30pm and to provide some instant context. We will send clients a Rapid Response immediately after the speech and a more detailed Focus later in the day.

23 March 2022
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