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Brace for a jump to 2% in April The rise in CPI inflation from +0.6% in December to +0.7% in January (consensus forecast +0.6%) was trivial given that leaps to around +2.0% in April and to around +2.5% by the end of the year appear to be baked in the …
17th February 2021
Avoiding a technical double-dip recession The media headlines have focused on the record-breaking 9.9% decline in annual GDP in 2020, but t he rise in GDP in Q4, despite the COVID-19 lockdown in November and restrictions in December, is further evidence …
12th February 2021
Easing in the rush for cash The easing in the COVID-19 restrictions meant that businesses did not rush as fast to take on more debt in December. And with households investing in property and strengthening their balance sheets, there is scope for household …
1st February 2021
Unemployment to continue its slow climb The rise in the unemployment rate in November is another step up on the climb towards the 6.5% peak we expect by the end of the year. But with the rollout of vaccines going well, the jobless rate may be back at its …
26th January 2021
Third lockdown far less damaging than the first January’s flash composite PMI is consistent with our view that the third lockdown, like the second, was much less damaging for the economy than the first lockdown in March/April 2020. But it suggests that …
22nd January 2021
Budget deficit should shrink without tax rises December’s jump in borrowing is likely to set the tone for the next few months as the third COVID-19 lockdown keeps many businesses closed and will only increase talk of how to pay for the crisis. But the …
Bad January to follow poor December The tiny rise in retail sales in December shows that it wasn’t a very merry Christmas for retailers. And January’s lockdown means it won’t have been a happy start to the new year either. But at least retailers are more …
Inflation to temporarily rise above target later this year The rise in CPI inflation from 0.3% in November to 0.6% in December and in the core rate from 1.1% to 1.4% may represent the first step on a climb towards a peak of about 2.5% by the end of the …
20th January 2021
Economy builds up some immunity to lockdowns The economy has built up a fair bit of immunity to lockdowns, as November’s second COVID-19 lockdown was much less painful for the economy than the first lockdown in March/April of last year. The same is …
15th January 2021
Households in a good position to spend, but small businesses struggling November’s money and credit figures highlighted the divergence between households who continued to pay back credit and invest in property, and small businesses who were once again …
4th January 2021
Second lockdown sends borrowing soaring again November’s surge in borrowing is unlikely to be reversed much over the next few months as the ongoing COVID-19 restrictions keep many businesses closed. This will only increase talk of how to pay for the …
22nd December 2020
High savings rate paves the way for solid rebound in 2021 While a double-dip recession is a clear possibility if the Tier 4 COVID-19 restrictions are extended into 2021, Q3’s high saving rate provides optimism that as long as vaccines are effective and …
Second lockdown has much smaller impact than the first The relatively small drop in retail sales in November indicates that the second COVID-19 lockdown didn’t change households spending behaviour by anywhere near as much as the first. And it suggests …
18th December 2020
PMIs understating both the fall in GDP and the rebound The small rebound in the composite PMI in December suggests that GDP did not make much of a recovery after the hit to activity from the COVID-19 lockdown in November. But it is probably understating …
16th December 2020
Low inflation won’t prompt the MPC to act The sharp fall in inflation from 0.7% in October to 0.3% in November (consensus 0.6%) and in the core rate from 1.5% to 1.1% came as a bit of a surprise. However, some of these moves were driven by one-off …
Steady drip-feed of weaker news The smaller-than-expected fall in employment in October shows that the government’s furlough scheme has minimised the labour market damage from COVID-19 so far and provides encouragement that there will be a steady trickle, …
15th December 2020
GDP barely grew at all in October, but hope further ahead The economy continued to grow in October, but at a snail’s pace. And with the COVID-19 restrictions likely to remain in place for some time, the economy is in for a difficult few months yet. But …
10th December 2020
Households in a good position to start spending once restrictions lifted October’s money and credit data showed that the mini-boom in the housing market continued, but a fall in consumer credit suggests that consumer spending was already faltering before …
30th November 2020
PMIs suggest economy holding up better than expected in second lockdown The relatively small fall in November’s flash composite PMI suggests that the hit to GDP from the second lockdown will be much smaller than the first and that our expectation of an 8% …
23rd November 2020
Better news on government borrowing won’t last October’s public finances figures were far better than expected. But the likely economic contraction in November and extension of the government’s support measures mean that the better news won’t last. The …
20th November 2020
Shift towards online supports sales before lockdown The further rise in retail sales in October means that retail sales are now 6.8% above their pre-virus level. But the current lockdown means that retail sales, and total consumer spending, will probably …
Pockets of pandemic-induced inflation, but outlook subdued The rise in CPI inflation from 0.5% in September to 0.7% in October shows that inflation is well past its crisis low point of 0.2%. But while it will rise more significantly from next April, we …
18th November 2020
Recovery already over, but hope on the horizon We now know that the record breaking fall in GDP of 19.8% q/q in Q2 was followed by a record breaking rise of 15.5% q/q in Q3. But meagre growth in September shows that the recovery was rapidly running out of …
12th November 2020
Previous unwinding of furlough scheme hurts employment and worse to come September’s rise in the unemployment rate from 4.5% in August to 4.8% suggests that the previous scaling back of the furlough scheme took its toll. And the unemployment rate may yet …
10th November 2020
Mini-housing boom continues but consumers shun other borrowing September’s money and credit data showed that the mini-boom in the housing market continued, but a fall in consumer credit suggests that consumer spending was already faltering before the …
29th October 2020
Heading for a double-dip The fall in October’s Flash activity PMI comes before the full force of the latest COVID-19 restrictions are felt and supports our view that GDP will stagnate, if not contract, in the last three months of the year. If the economy …
23rd October 2020
Slowing recovery to weigh on spending The further rise in retail sales in September means that retail sales are now 5.5% above their pre-virus level. But total consumer spending will probably start to stutter over the next few months as the furlough …
Government borrowing shows little sign of easing off Monthly borrowing in September was the third highest on record, only exceeded by that in April and May when the pandemic and the fiscal response were at their height. With the recovery stuttering and …
21st October 2020
Low inflation gives the green light to more QE With CPI inflation just 0.5% in September and new COVID-19 restrictions darkening the economic outlook again, it’s hard to think of reasons why the Bank of England won’t launch another £100bn or so of …
More bad news to come The fallout in the labour market from the COVID-19 recession has been worse than previously thought. And with the latest COVID-19 restrictions threatening to stall the economic recovery, if not send it into reverse, the unemployment …
13th October 2020
Recovery already flattening off in August The disappointing 2.1% m/m rise in GDP (consensus forecast 4.6%) adds to the evidence that the initial rebound in economic activity is running out of steam. And with new restrictions being imposed to curb the …
9th October 2020
Government passing the pain to households and businesses The bulk of the pain of Q2’s slump in GDP had been borne by the government rather than households and businesses. But with the recovery already flattening off, fiscal support fading and the full …
30th September 2020
Housing market on fire, but consumers seem lukewarm While the resurgence in the housing market continued in August, consumer credit barely rose. And the darkening clouds on the economic horizon may tempt some households to start to rein in spending in the …
29th September 2020
Fiscal support to fade in the autumn The government borrowed another huge sum of £35.9bn in August as it continued to absorb much of the cost of the COVID-19 crisis. But while the Chancellor announced some modest further support yesterday, the big picture …
25th September 2020