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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.
Bethany Beckett UK Economist
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UK Economics Weekly

Fall in confidence not enough to rule out aggressive rate hikes

Signs that business confidence has started to ease may provide the Monetary Policy Committee with some reassurance that firms' pricing power will soon soften. But the danger that bigger increases in wages will further add to businesses' costs, forcing them to raise their prices by even more, suggests that the Bank may need stronger proof that pricing power is waning before ruling out the need for more aggressive rate rises. We expect interest rates to rise from 1.25% to 3.00%. And for as long as evidence of increased pricing power exists, the risk of even higher rates will linger.

1 July 2022

UK Data Response

Money & Credit (May)

The more muted rise in unsecured borrowing in May suggests the cost of living crisis and recent plunge in consumer confidence are prompting households to exercise a bit more caution. That adds to reasons to think consumer spending is struggling and that the economy will be very weak over the coming months.

1 July 2022

UK Data Response

GDP (Q1 Final)

The final Q1 GDP data leave households looking a bit more vulnerable to the big fall in real incomes that’s going to hit in Q2 and Q3. Although GDP and consumer spending won’t fall as far as real incomes, it’s pretty clear that the economy is going to be very weak for a while. A recession is a real risk.

30 June 2022

More from Bethany Beckett

UK Economics Weekly

Household (budgets) to feel the heat in 2022

Against a backdrop of higher inflation, a jump in utility prices and rising taxes, household budgets will come under strain in the coming months. Indeed, we are forecasting the fastest contraction in real wages since the aftermath of the Global Financial Crisis. But we don’t think the impact on households’ overall real incomes will be as big. The government could announce new support measures, while the strong labour market and big stock of household savings should to help cushion the blow.

7 January 2022

UK Data Response

Money & Credit (Nov.)

The healthy rise in consumer credit in November adds to evidence that economic activity strengthened in the middle of Q4. But that feels like a distant memory now. Against a backdrop of surging COVID-19 cases, we suspect that households’ appetite for unsecured borrowing has dropped back since then.

4 January 2022

UK Data Response

GDP (Q3 2nd Estimate)

Today’s release indicates the economy had a bit less momentum in Q3 than we had previously thought. And, with early signs the Omicron variant has hit activity, growth is sure to have slowed further in Q4.

22 December 2021
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