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The 2.1% m/m gain in GDP in March added to other evidence that the economy is recovering more rapidly from the COVID-19 crisis than even our above consensus view had suggested. (See here .) As a result, we have revised up our 2021 GDP forecasts. The 6.5% …
14th May 2021
Upgrades to the Bank of England’s economic forecasts were widely anticipated. But the Monetary Policy Committee (MPC) still managed to surprise us at this week’s policy decision with the size of these upgrades and its hawkish tone. If anything, it sounded …
7th May 2021
Focus on levels, not growth rates People are coming round to the view we have held since November that activity will rebound rapidly as the economy reopens. If anything, the latest evidence, such as the jump in spending on debit and credit cards in the …
30th April 2021
By far the biggest news story this week was the establishment and swift collapse of the European football Super League. If there were an economics version where success depended on where GDP is at the end of 2022, then the UK may win. The UK started at …
23rd April 2021
Amid the reopening of shops and pubs this week, it was the subtler news that the Monetary Policy Committee’s (MPC) arch-optimist Andy Haldane is leaving the MPC at the end of June that caused a reaction in the markets. Many have assumed that this will …
16th April 2021
Despite the chill in the air and the risk of a setback to the vaccination rollout due to this week’s recommendation by the MHRA that under 30s should be given a COVID-19 vaccine other than the AstraZeneca one, the economy appears to have begun April with …
9th April 2021
The upward revision to GDP in the second half of 2020 means the economy does not have quite as far to recover from the COVID-19 crisis. But it doesn’t change the big picture that GDP will probably get back to its pre-crisis level by early 2022. (See here …
1st April 2021
Despite the good news on economic activity, there have been few signs that this is igniting inflation just yet. So while we think the rally in 10-year gilt yields has further to go, we doubt yields will rise far. While the risk of an interruption to the …
26th March 2021
At first glance the further rise in 10-year gilt yields to a 15-month high of 0.82% this week seems odd when on Thursday the Bank of England’s Monetary Policy Committee (MPC) showed no signs of moving closer to raising interest rates. Admittedly, the MPC …
19th March 2021
BoE to hold firm At its meeting on Thursday the European Central Bank (ECB) struck a decidedly dovish tone by announcing that it will step up its bond purchases to “prevent a tightening in financial conditions”. (See here .) After all, yields on Italian …
12th March 2021
In this week’s Budget, the Chancellor, Rishi Sunak, appears to have pulled off the feat of solving some of the fiscal challenges without significantly risking the economic recovery. (See here .) His decision to wait until October before turning off the …
5th March 2021
The roadmap out of the current COVID-19 lockdown announced by the Prime Minister on Monday was similar to the assumptions we had already built into our economic forecasts. As such, it didn’t reroute our forecast that the recovery will be faster and fuller …
26th February 2021
The 8.2% m/m fall in retail sales confirmed that January’s lockdown hit retailers much harder than November’s lockdown, when sales fell by “only” 4.0% m/m. But it still wasn’t anywhere near as large as the 18.0% m/m drop in the first lockdown in April …
19th February 2021
The possibility that international travel restrictions could remain in place this summer implies that the rapid vaccine rollout won’t be enough to ensure a swift return to normality for the hard-hit tourism sector. But this is unlikely to put a huge dent …
12th February 2021
A fortnight ago we highlighted two downside risks to our forecasts that the economy would enjoy a quick and complete recovery from the COVID-19 crisis. (See here .) But the past week has highlighted two upsides, which also caught the attention of the …
5th February 2021
The labour market has been remarkably strong since the onset of the pandemic. The unemployment rate has only risen from 4.0% in February to 5.0% in November and the 3.6% 3myy rise in earnings in November means that wages were rising at their fastest …
29th January 2021
Two developments this week threaten the view we laid out in our recent UK Economic Outlook that the economy will enjoy a quick and complete recovery from the COVID-19 crisis. (See here .) The first are the rumours that the Chancellor is planning to raise …
22nd January 2021
This week’s news on the economic damage caused by the virus and the efforts to fight it have given us some cause for optimism. By 13 th January, 4.4% of the population had received their first COVID-19 vaccination dose. Admittedly, in order to achieve its …
15th January 2021
We don’t know exactly how long the third English lockdown, which started on 5 th January, will last. Government ministers have talked about schools being closed until mid- or late-February, but the lockdown legislation MPs voted into law on Wednesday has …
8th January 2021
The sentiment from this passage we published in the first UK Economics Weekly of this year still feels relevant for 2021: “With something like a no deal still possible in December, Brexit uncertainty will prevent 2020 being a good vintage for the …
18th December 2020
It’s been over four years since the EU referendum and the world is a clearly a very different place. However, when it comes to Brexit, it feels like Groundhog Day. The EU Summit on 10 th /11 th December, billed as the moment when a Brexit deal could be …
11th December 2020
Depending on which paper you have read this week a Brexit deal is either all-but done, with just some technical details to iron out, or the negotiations are about to collapse due to demands from the EU and intransigence by the UK. We admit that we don’t …
4th December 2020
Following the news on 9 th November that the Pfizer and BioNTech COVID-19 vaccine is very effective, we highlighted how this could dramatically improve the economic outlook. (See here .) Since then, the positive news on other vaccines has convinced us to …
27th November 2020
In the webinar we hosted this week titled “The UK’s Triple Threat – COVID, Brexit and Debt”, we concluded that the outlook for the economy is brightening. That is unless politicians darken it again with an “uncooperative” no deal Brexit or by tightening …
20th November 2020
This week’s release of the Q3 GDP data showed that despite a record-breaking 15.5% q/q surge in GDP, the economy was still 9.7% smaller than at the end of 2019. In contrast, the French, Italian and German economies were all about 4% smaller and the US …
13th November 2020
With a newly imposed lockdown, policymakers putting in place more support and economists rushing around changing their forecasts, you could be forgiven for thinking we had somehow been transported back to March! We are hoping that our new forecasts prove …
6th November 2020
We have been warning since early June that a weak economic recovery and the resulting soft outlook for inflation would prompt the Bank of England to loosen policy by more than was widely anticipated. (See here .) And that for the next 6-12 months, the …
30th October 2020
Usually employment is determined by the number of workers needed to satisfy demand, so it has a good relationship with GDP. (See Chart 1.) But due to the national furlough scheme, despite GDP (the black line) plunging, employment (the blue line) held up …
23rd October 2020
We published our new set of economic forecasts on Monday, in which we warned that the tightening in COVID-19 restrictions would mean that GDP might not rise at all in October, November and December. We also said that the unemployment rate would rise from …
16th October 2020
The economic recovery from the COVID-19 recession was always going to slow at some point. But the 2.1% m/m rise in GDP in August was smaller than the 5.0% m/m gain we had anticipated and suggests that recovery is running out of steam sooner than we …
9th October 2020
While UK-EU relations deteriorated on one front this week, with the EU sending the UK a letter to formally begin legal procedures over the UK’s plans to undermine parts of the Withdrawal Agreement, there appears to have been a more constructive mood in …
2nd October 2020
In response to a marked rise in the number of virus cases over the past few weeks, Boris Johnson announced that people should work from home if they can, that bars and restaurants would have to close at 10pm and that the reopening of other parts of the …
25th September 2020
Investment holding back the recovery It seems that consumers have largely forgotten about the pandemic already. Retail sales are now 4.0% above their pre-pandemic level (see here ) and the mini-boom in the housing market will continue to support …
18th September 2020
A 6% fall in the pound from $1.35 to $1.28, questions over the legality of the government’s actions and condemnation from the EU are all sure signs that the summer is over, a Brexit deadline is looming and the possibility of the transition period ending …
11th September 2020
Indigestion from the success of the government’s “Eat Out to Help Out” scheme seems to have struck in Westminster. The scheme boosted the number of diners in restaurants by over 200% y/y on the last day of August and by more than 20% y/y over the month as …
4th September 2020
After the 8.7% m/m gain in GDP in June, another surge as the economy re-opened in July is already baked in the cake, perhaps of 7.5% m/m according to our CE BICS Indicator. (See here .) But while this rise sounds impressive, GDP would still be 11% below …
28th August 2020
The surprise rise in CPI inflation, from +0.6% in June to +1.0% in July, highlights that the effects of the pandemic will not only be deflationary. While some of the increase was due to recovering oil and fuel prices, core inflation also rose. That was …
21st August 2020
The overwhelming bulk of the pain from the huge 20.4% q/q fall in real GDP in Q2 (which hides the bigger peak to trough fall of 25.6% between February and April) has so far been borne by the government and businesses rather than by households. But that is …
14th August 2020
Interest rates lower for longer The Monetary Policy Committee (MPC) could have saved itself some time and just read our UK Economics Focus , published on 4 th June, or our UK Economics Update , published 14 th May, both of which came to much the same …
7th August 2020
Easing the economy off life support As we enter August, we come to the first of many crunch points in the economy’s recovery from the coronavirus. (See here .) The labour market has been in suspended animation with the government’s furlough scheme …
31st July 2020
An anniversary present for the PM? This morning’s retail sales and PMI releases, which appeared to suggest that the economy is quickly recouping the output lost during the coronavirus lockdown and is getting back to normal quicker than the euro-zone, were …
24th July 2020
Not so “V” After the temporary respite brought by May’s strong retail sales figures, this week marked a return to the generally gloomy news on the pace of the recovery. Activity struggled to recover meaningfully in most sectors of the economy in May, with …
17th July 2020