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Given the drop in GDP in Q2, the fall in core inflation to an almost 3-year low in August and the ongoing Brexit drama, there was never much chance that the MPC would raise interest rates from 0.75% today. And even though the tone of the minutes was …
19th September 2019
The implementation of a change to how student loans are classified in the public finances, on top of a jump in government spending so far this year and the 2019 Spending Round, means the Government’s fiscal target is dead in the water. But this shouldn’t …
16th September 2019
The impact of the trade war between the US and China on the UK economy has been small, even allowing for the indirect effects on investment and the financial markets. Admittedly, trade tensions will probably intensify further from here. Even so, the …
11th September 2019
When the Brexit process comes to a head in October the economy could shift onto a new trajectory. This Update sets out the key events that could affect which of our forecasts the economy follows. The first thing to point out is that there won’t be an …
10th September 2019
This Update was originally sent to clients as a Rapid Response immediately after the vote in Parliament late on Wednesday 4 th September on the Prime Minister’s call for a general election on 15 th October. Tonight was a good night in Parliament for the …
4th September 2019
While the bulk of the extra spending unveiled today in the 2019 Spending Round had already been announced, its overall stance was a bit looser than had been anticipated. This could raise GDP growth by about 0.2ppts in 2020 and by 0.1ppt in 2021, …
Following the vote in Parliament to push on with legislation to rule out a no deal Brexit, a general election is on the cards either before or after a delay to Brexit. With the Conservatives ahead in the polls, a no deal Brexit may will remain a strong …
This Update was originally sent to clients as a Rapid Response immediately after the vote in Parliament late on Tuesday 3 rd September on the first step of plans to delay Brexit from 31 st October to 31 st January 2020. Tonight’s decision by Parliament to …
3rd September 2019
There is a wide range of plausible outcomes for the economy if the Labour Party were to win a general election. But our inkling is that the most likely result would be a moderately weaker economy than otherwise, modestly higher interest rates and bond …
The events in Parliament over the next week and a half will be crucial in determining whether Brexit will be delayed beyond 31 st October, whether there’s an election or whether there is a big step up in the chances of a no deal that could hit the …
2nd September 2019
The surge and contraction in GDP over the first half of the year can be blamed on the original 29 th March Brexit deadline. While we expect a similar pattern in Q3/Q4 due to the current 31 st October deadline if there isn’t a no deal, we doubt it will be …
29th August 2019
The Prime Minister’s decision to suspend Parliament from sometime in the second week of September until 14 th October increases the downside risks to the economy and the pound by decreasing the chances of a further delay to Brexit and increasing the …
28th August 2019
The weakness in the retail surveys has led some to question whether the consumer sector will succumb to the malaise that has taken hold in the manufacturing sector. But we are sceptical the consumer sector will falter. In all our Brexit scenarios, we …
21st August 2019
While much of the sharp contraction in manufacturing in the second quarter can be put down to Brexit distortions, a meaningful recovery is unlikely given the ongoing struggles of global manufacturing. But the resilience of the services sector suggests …
19th August 2019
The inversion of the yield curve has stoked concerns about the possibility of an imminent recession, if the UK is not already in one. However, even though the downside risks to the economy have increased recently, unless there is a no deal Brexit we still …
15th August 2019
We probably won’t know for sure if the UK is heading for a no deal Brexit until the moment it actually happens, which would be at 11.00pm on 31 st October 2019. But there are a number of keys dates in the 84 days between now and then that could either …
8th August 2019
Much like the Fed, the Monetary Policy Committee today blamed a lot of its more downbeat assessment of the outlook on the global economy. But unlike the Fed, the MPC still thinks it will probably need to raise interest rates (if there’s a Brexit deal). …
1st August 2019
There has been mounting speculation that the Monetary Policy Committee (MPC) will join the global loosening cycle by cutting interest rates. We think it will if there is a no deal Brexit. But if there’s a Brexit deal or many more delays, the UK could buck …
31st July 2019
Our estimates suggest that if a no deal Brexit was fully priced into the market the pound would fall from $1.22 (€1.09) now to about $1.15 (€1.05) or a little lower. Over the past few days the pound has weakened to two-year lows of $1.22 and €1.09 in …
30th July 2019
Spending on cars has fallen sharply since the EU referendum, and unless a Brexit deal is agreed we suspect that it will remain a drag on consumer spending growth for a few years yet. Since the EU referendum in June 2016, real spending on cars has declined …
29th July 2019
Any spending spree by the new administration will probably be accompanied by a rise in borrowing, which could breach the current fiscal rule, especially if there is a no deal Brexit. However, fiscal rules are made to be broken, so we don’t think that this …
24th July 2019
Despite his hard-line stance on the campaign trail, there is no way of knowing how Boris Johnson will handle Brexit once he becomes Prime Minister tomorrow. But it’s going to be turbulent and the chances of a no deal Brexit (and a general election and/or …
23rd July 2019
As long-term clients will know, we have been publishing different forecasts for the economy based on two different Brexit outcomes, “deal on 31 st October” and “no deal on 31 st October”. We are now adding a third – “repeated delays” in which the Brexit …
1st July 2019