UK Economics Weekly BoE to talk up high for long This week the Bank of England’s Chief Economist, Huw Pill, said that he didn’t think interest rates will rise much further from 5.25% now but that rates are likely to stay high for a long time. We’re... 1st September 2023 · 4 mins read
UK Economics Weekly Interest rate medicine is starting to work The phasing out of the government's support packages and the growing drag from higher interest rates probably explain why the economy appears to have lost momentum in recent months. Since these drags... 25th August 2023 · 4 mins read
UK Economics Weekly Rise in rate expectations casts doubt on pre-election tax cuts We would be surprised if the Chancellor is unable to find any cash to deliver some popular sweeteners to the electorate ahead of the next general election. But the latest data are a setback for the... 18th August 2023 · 6 mins read
UK Economics Weekly UK unlikely to follow the US closely this time While the evidence of broad-based, rapid disinflation in the US offers some hope for the UK, we suspect the UK will not quickly follow the US. Instead, we think the UK's recent problems of higher... 11th August 2023 · 7 mins read
UK Economics Weekly Peak does not mean pivot There are two key points to remember as we near the end of the hiking phase of the interest rate cycle and get close to the holding phase. First, a peak in interest rates does not mean that a pivot to... 4th August 2023 · 8 mins read
UK Economics Weekly BoE QE losses unlikely to lead to a big fiscal tightening We doubt the Bank of England’s cumulative net loss from its quantitative easing programme will be a big as the £150bn estimated by the Bank earlier this week. That’s because we don’t think interest... 28th July 2023 · 5 mins read
UK Economics Weekly BoE last to halt hikes and last to cut We think UK core inflation will ease to 2% by the end of 2024 as the effects of the rises in interest rates are felt. But the UK’s more persistent labour supply shortfall than elsewhere suggests this... 21st July 2023 · 5 mins read
UK Economics Weekly Paying particular attention to pay growth The government’s decision to grant pay rises of 5-7% for some public sector workers will probably add to the persistence of inflation and, for the Bank of England, trump the recent easing in some... 14th July 2023 · 9 mins read
UK Economics Weekly Yield curve’s recession warnings could be right this time The gilt yield curve is now the most inverted it has been in 23 years. That’s consistent with our view that a recession is just around the corner. Indeed, we think it’s only a matter of time before... 7th July 2023 · 10 mins read
UK Economics Weekly BoE’s dovish tone is coming back to haunt it The hawkish comments made by the Bank of England Governor, Andrew Bailey, at this week’s ECB annual Sintra gathering marks the latest step by the Bank to get on the front foot in its fight against... 30th June 2023 · 5 mins read
UK Economics Weekly BoE can’t get no satisfaction Judging by the heavy criticism of the Bank of England this week, it seems as though it is dammed if it raises interest rates rapidly and damned if it raises them slowly. While we think some of the... 23rd June 2023 · 6 mins read
UK Economics Weekly Growing pains in the gilt, mortgage and rental markets The surge in gilt yields above the level reached after the Truss/Kwarteng mini-budget last September has pushed mortgage rates even higher and illustrates that most of the drag on real activity and... 16th June 2023 · 10 mins read
UK Economics Weekly Why interest rates haven’t hurt…yet Higher interest rates haven’t dented the real economy much because household incomes have been unusually strong and the interest rates households are actually paying on their loans has not yet risen... 9th June 2023 · 10 mins read
UK Economics Weekly Some signs that higher interest rates are working Higher interest rates appeared to have started to take a bigger toll on bank lending in April and on businesses’ inflation expectations in May. These data will have reassured the Bank of England that... 2nd June 2023 · 4 mins read
UK Economics Weekly BoE has to work harder to quash inflation It’s become clearer that domestic inflation isn’t going to fall while economic activity is strengthening. As such, we now think that the Bank of England will have to raise interest rates further, from... 26th May 2023 · 4 mins read
UK Economics Weekly High migration won’t cool inflation pressures quickly Migration appears to be rebounding much faster than anyone expected. But the continued "mismatches" between workers and vacancies implies that migrants have not been effective at filling all the... 19th May 2023 · 10 mins read