Money & Credit (Jul.)

The latest money and credit figures do little to ease mounting concerns that the resurgence in virus cases in July and so-called “pingdemic” brought the consumer recovery to a halt.
Ruth Gregory Senior UK Economist
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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

UK Data Response

Retail Sales (Dec.)

The fall in retail sales volumes in December was bigger than expected and supports our view that the Omicron outbreak in the run-up to Christmas may have dragged down GDP by 0.5% m/m, if not more.

21 January 2022

UK Economics Update

Real wage squeeze unlikely to be a rerun of 2008-14

The looming squeeze on real wages means that the near-term outlook for consumption and GDP has weakened. That said, we don’t expect anything as bad as the squeeze in 2008-14. In fact, real household disposable income may well recover by early 2023.

20 January 2022

More from Ruth Gregory

UK Economics Weekly

Inflation concerns, economy off to a bad start in Q3

The latest batch of labour market data will have done little to ease the Monetary Policy Committee’s (MPC) concerns that the coming rise in inflation could be sustained in 2022. But we are not convinced that a majority of MPC members will vote for an interest rate hike in mid-2022, as some forecasters expect, and instead think that it will happen in mid-2023.

20 August 2021

UK Data Response

Retail Sales & Public Finances (Jul.)

While there was good news on public borrowing, the slump in retail sales added to other evidence indicating that in July the economic recovery slowed to a crawl.

20 August 2021

UK Data Response

Consumer Prices (Jul.)

July’s drop in CPI inflation is likely to be followed by sharp rises in the next few months, taking inflation to a peak of about 4.5% by the end of the year. But provided the spike in inflation does not feed through into higher inflation expectations or persistently faster pay growth, we do not think that the Bank of England will respond next year by tightening monetary policy.

18 August 2021
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