UK Economics Update Unemployment set to rise further, but not as far as feared Given the success of the government’s job furlough scheme and the signs of a strong initial rebound in economic activity we now think that the unemployment rate will peak later, in June 2021 rather... 2nd July 2020 · 5 mins read
UK Economics Update Further fiscal stimulus to reduce risk of long-term scarring With further fiscal support likely to be unveiled at some point in the next few weeks, the government appears willing to sustain the fiscal stimulus into the years ahead rather than lurch towards... 29th June 2020 · 3 mins read
UK Economics Update Pepys, plagues and pubs If the behaviour of Samuel Pepys after the Great Plague of 1665/66 is anything to go by, then people will be willing to return to offices, shops, pubs and theatres surprisingly quickly once the... 22nd June 2020 · 6 mins read
UK Economics Update MPC will do more QE, eventually We think today’s Monetary Policy Committee decision to keep rates on hold at +0.10% and increase Quantitative Easing (QE) by £100bn is unlikely to be the last act of policy loosening. And while we... 18th June 2020 · 3 mins read
UK Economics Update The consensus is still too optimistic Other forecasters were slow to appreciate the depth of the recession. Since then, the consensus GDP forecast has been revised down close to our own. But we think other forecasters are still... 18th June 2020 · 2 mins read
UK Economics Update ILO be damned? The latest data highlighted a diverging trend between the two main measures of unemployment. Neither measure is perfect, but at least the claimant count is timelier than the ILO measure. Until the ILO... 17th June 2020 · 4 mins read
UK Economics Update Return of risk appetite to benefit UK assets A continued return of risk appetite as the economy slowly recovers from the coronavirus crisis will boost equities and the pound so long as there is a compromise on Brexit. But with the Bank of... 16th June 2020 · 3 mins read
UK Economics Update Brexit will hold back the recovery We assume that a slim trade deal will be agreed by the end of this year and that a big step change in the UK-EU relationship will be avoided. But with the chances of a “no extension, no Brexit deal”... 15th June 2020 · 8 mins read
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