UK Economics Update High business borrowing is the lesser of two evils The huge amount of borrowing undertaken by firms in the last three months is reassuring in the sense that businesses are getting the cash they need to make ends meet. But some firms won’t be able to... 11th June 2020 · 4 mins read
UK Economics Update Government to live with debt rather than lurch towards austerity Unlike the period after the Global Financial Crisis, we doubt that the government will immediately turn to a prolonged period of austerity after the surge in the debt to GDP ratio during the... 10th June 2020 · 5 mins read
UK Economics Update Will households spend their savings? The bulk of the leap in the saving rate will be reversed as the economy opens and people start spending again but the desire to hold more savings post-lockdown combined with lower incomes will weigh... 10th June 2020 · 3 mins read
UK Economics Update Furloughs prevent tsunami of layoffs, but second wave likely The government’s furlough scheme has prevented the UK economy from being engulfed by a tsunami-like first wave of unemployment. But a second wave will probably come once the reduction in the... 21st May 2020 · 3 mins read
UK Economics Update Pound taking a one-two punch from coronavirus and Brexit The recent weakness in the pound has been driven by renewed concerns about Brexit and the prospect that the Bank of England will have to cut interest rates below zero to support the economy. As a... 19th May 2020 · 3 mins read
UK Economics Update Fiscal costs of crisis may be greater than OBR predicts With the Office for Budget Responsibility’s government borrowing forecasts only including the cost of just one of the extra four months of the Job Retention Scheme and no medium-term scarring effects... 14th May 2020 · 3 mins read
UK Economics Update Bank of England unlikely to take rates negative We think it is far more likely that the Bank of England will use further rounds of Quantitative Easing to boost demand rather than cut interest rates into negative territory as the market is... 14th May 2020 · 3 mins read
UK Economics Update The next expansion in QE may not be the last While the Monetary Policy Committee left its interest rate and quantitative easing policies unchanged this morning, it implied that an expansion of QE is imminent. This leaves our existing call that... 7th May 2020 · 3 mins read
UK Economics Update BoE focus will shift from liquidity to monetary policy The Bank of England has been expanding its balance sheet during the coronavirus crisis mainly to fulfil its role of lender of last resort in a liquidity crisis. That will probably remain the focus for... 6th May 2020 · 4 mins read
UK Economics Update Bank loan losses to approach GFC levels We estimate that banks will have to absorb about £50bn of loan losses from corporate and household defaults as a result of the coronavirus crisis. If anything, the risks are for even bigger losses... 29th April 2020 · 3 mins read
UK Economics Update Length of lockdown and the implications for GDP With the reopening of the economy to be governed by the extent to which the coronavirus is brought under control and the burden being placed upon the NHS, there is still a lot of uncertainty about how... 29th April 2020 · 5 mins read
UK Economics Update What shape will the coronavirus recovery take? The shape of the economic recovery from the coronavirus crisis mainly depends on the spread of the virus, the effectiveness of the policy response and the extent to which consumers and businesses... 27th April 2020 · 5 mins read
UK Economics Update Economic loss from coronavirus on a par with GFC It has become clearer to us that the economic legacy of the coronavirus crisis will last a number of years. Our new forecast is that the economy will be about 5% smaller (£100bn) at the end of 2022... 14th April 2020 · 6 mins read
UK Economics Update Are the Bank’s helicopter blades starting to turn? We won’t know until the future whether or not the Bank of England has launched helicopter money as it depends if the rise in the money supply is temporary or permanent. But more important is whether... 9th April 2020 · 3 mins read
UK Economics Update Business insolvencies to reach same level as the GFC The number of business insolvencies could reach the same level as in the Global Financial Crisis over the next few years, keeping the unemployment rate high and holding back the economic recovery. 8th April 2020 · 3 mins read
UK Economics Update Rising chance of an extension to the Brexit transition period Brexit is clearly not a priority right now. But with negotiations shelved due to the coronavirus, it is becoming increasingly likely that the government agrees to extend the transition period beyond... 7th April 2020 · 3 mins read
