UK Economics Update Will public sector pay rises drive up inflation? We don’t think the slew of inflation-busting public sector pay deals that have been agreed by the new government will prevent wage growth from slowing next year to the rates of 3.0-3.5% we think are... 21st August 2024 · 4 mins read
UK Economics Update Growth upgrade suggests UK no longer such a laggard The news that the economy may now be 2.6% bigger than its Q4 2019 pre-pandemic size, rather than 1.8%, suggests it is in better shape than we previously thought. But with the UK still suffering from... 7th August 2024 · 3 mins read
UK Economics Update Assessing the implications of the market turmoil for the UK Although the UK has clearly been caught up in the recent turmoil in global financial markets, we do not think a double-dip recession is on the cards. Nonetheless, the disorderly market reaction, if... 6th August 2024 · 5 mins read
UK Economics Update Rates cut to 5.00%, but BoE in no rush to cut again The Bank of England kick-started a loosening cycle today by cutting interest rates from 5.25% to 5.00%, but the accompanying guidance and forecasts suggest it will proceed cautiously. Accordingly, we... 1st August 2024 · 3 mins read
UK Economics Update How will Reeves fill the £22bn spending shortfall? Our best judgement is that in order to fund the increase in spending of £22bn outlined by the Chancellor today, Reeves will raise an additional £10bn a year (0.3% of GDP) via higher taxes and increase... 29th July 2024 · 6 mins read
UK Economics Update Is the UK’s fiscal situation as bad as the Chancellor says? Without wishing to downplay the ugly fiscal picture, we think the new government is overplaying the gloom. We suspect more optimistic economic forecasts and various tweaks to the fiscal rules will... 23rd July 2024 · 4 mins read
UK Economics Update Pay rise for NHS staff and teachers not a big inflationary risk We doubt the independent pay review bodies’ recommendations for the government to give teachers and NHS staff a 5.5% pay rise will prevent wage growth from slowing to 3.0% by the end of next year. But... 23rd July 2024 · 3 mins read
UK Economics Update Where are fiscal concerns greatest – the UK, France or US? With the public finances in the UK in decent shape relative to France and the US, and the new UK government committing to greater fiscal discipline, we think investors are right not to worry as much... 5th July 2024 · 5 mins read
UK Economics Update Labour wins election: Some upside to GDP, inflation and rates The big shift in the political landscape that has delivered the first Labour government since May 2010 is unlikely to lead to anything like as big a shift in the economic landscape. But at the margin... 5th July 2024 · 4 mins read
UK Economics Update How much fiscal ‘headroom’ will the next government have? If the polls are correct and Labour wins the election, the policies it implements and when it implements them will depend in part on the ‘headroom’ against the fiscal rules it is given by the Office... 27th June 2024 · 6 mins read
Global Economics Update What if central banks stopped remunerating reserves? The proposal to save governments money by ending interest payments on commercial banks’ reserves is a lot more complicated than some of its advocates suggest. The extreme version could either cause... 20th June 2024 · 5 mins read
UK Economics Update BoE may cut rates in August, but rates may reach 3.00% later The Bank of England predictably left interest rates unchanged at 5.25% today but continued to give the impression that the pieces of the puzzle are almost in place for it to cut rates. This lends some... 20th June 2024 · 3 mins read
UK Economics Update Will the next government deliver or deviate from its manifesto? While what’s in and what’s out of the election manifestos is informative, the bigger issue is whether the next government delivers or deviates from its manifesto. This Update sketches out three... 13th June 2024 · 7 mins read
UK Economics Update Which taxes could rise after the election? Whoever wins the general election on 4th July will have three main choices when it comes to spending and taxes. First, the new government could change the fiscal rules to give itself more fiscal space... 5th June 2024 · 5 mins read
UK Economics Update Smaller and slower falls in inflation and interest rates We still think inflation will fall faster than the Bank of England is expecting, but in the light of April’s CPI release we now expect the downward trend to be slower and smaller. As a result, we have... 23rd May 2024 · 5 mins read
UK Economics Update Migration is preventing the supply of labour from shrinking Putting the politics aside, the high number of migrants coming to the UK for work is the main reason why the number of people willing and able to work isn’t shrinking. 23rd May 2024 · 3 mins read
