UK Economics How would the economy cope with electricity shortages? There is an outside risk that the UK could face some limited short-term rationing of electricity this winter if weather conditions were to be unfavourable. This risk isn’t yet significant enough to... 18th October 2021 · 5 mins read
UK Economics Update Labour shortages becoming worse and more widespread Labour shortages seem to be worse and more widespread than we had expected. Although the end of the furlough scheme in late September may ease some of the shortages, we doubt it will plug all the... 12th October 2021 · 4 mins read
UK Economics MPC to keep feeling the heat from inflation expectations The recent sharp rise in public and market-based measures of inflation expectations has worried the Bank of England. Inflation expectations will probably rise further as actual inflation continues to... 5th October 2021 · 5 mins read
UK Economics Farewell furlough The impact on the labour market of the end of the furlough scheme could ultimately determine whether an interest rate hike comes in the next few months, or not until mid-2022. Our view remains that... 30th September 2021 · 3 mins read
UK Economics High utility prices and tax rises a heavy hit to households The double whammy of higher utility prices and the government’s new “health and social care levy” will reduce real household disposable incomes over the next year or so by £16.5bn, or 0.6% of GDP... 28th September 2021 · 4 mins read
UK Economics MPC getting closer to tightening policy While rates were left at +0.10% in an 9-0 vote and the Bank of England’s target stock of purchased assets at £895bn, today’s Monetary Policy Committee (MPC) policy statement suggests that the Bank is... 23rd September 2021 · 3 mins read
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... 17th September 2021 · 4 mins read
UK Economics The rise in consumer prices is not widespread A deeper dive into the CPI figures supports our initial analysis that the bulk of the jump in inflation from 2.0% in July to 3.2% in August is due to base effects linked to falling consumer prices in... 15th September 2021 · 3 mins read
UK Economics Government leaves itself with some fiscal ammo to utilise later The net effect of today’s announcements on social care reform may provide a very small boost to GDP. But perhaps more important is that by funding more spending on social care by raising taxes, the... 7th September 2021 · 3 mins read
UK Economics HGV labour shortages won’t drive interest rates up next year Reports that shortages of heavy good vehicles (HGV) drivers have become more acute and have raised drivers’ pay will do little to ease fears that higher wage growth could persistently lift CPI... 3rd September 2021 · 3 mins read
UK Economics Inflation expectations – what to watch The inflation expectations of households, businesses and the financial markets will probably rise in the coming months as actual CPI inflation jumps to over 4.0% later this year. But as the rises are... 25th August 2021 · 4 mins read
UK Economics Update MPC starts to signal rate hikes The Monetary Policy Committee’s (MPC) policy statement sent a clear signal that higher interest rates are on the horizon. But there were few signs that it is preparing to hike rates soon. What’s more... 5th August 2021 · 3 mins read
UK Economics Inflation expectations & pay growth key to policy tightening A bumper rise in utilities prices in October could contribute to CPI inflation climbing to a 10-year high of 4.4% in November. But as we don’t expect higher CPI inflation to feed through into higher... 3rd August 2021 · 5 mins read
UK Economics CPI inflation may peak around 4% Bigger rises in commodity and component costs than we had expected mean that we now think CPI inflation will rise from 2.1% in May to a peak of about 4.0% around the turn of the year. But we still... 6th July 2021 · 9 mins read
UK Economics Recovery evolving rather than stalling The recent softening in some indicators of activity is probably mostly a result of shifts in spending patterns within the economy rather than a sign that the recovery has already stalled. As such, we... 29th June 2021 · 3 mins read
UK Economics MPC more optimistic, but no more hawkish Other than the Monetary Policy Committee noting the growing upside risks to inflation alongside today’s policy decision, there were no real signs that it is thinking about tightening policy sooner, à... 24th June 2021 · 3 mins read
