UK Economics Weekly Inflation a persistent problem for the Bank of England Lingering underlying price pressures and the continued resilience of economic activity has left us more comfortable than we were at the start of this week with our view that the Bank of England will... 21st April 2023 · 5 mins read
UK Economics Weekly Surge in household incomes unlikely to be sustained Some of the continued resilience of the economy has been due to the performance of household incomes, which in real terms hasn't been as weak as we expected. Some of that is due to government payments... 14th April 2023 · 10 mins read
UK Economics Weekly Rate hikes may come sooner rather than later We think the Bank of England may opt to raise interest rates further from 4.25% sooner rather than later. Our central forecast is for interest rates to rise from 4.25% now to a peak of 4.50% and for... 6th April 2023 · 9 mins read
UK Economics Weekly Banking strains will amplify tightening in credit conditions Even before the turmoil in the banking sector, UK banks were planning on sharply reducing the amount of credit available to households. The recent strains in the banking sector will amplify the... 31st March 2023 · 5 mins read
UK Economics Weekly The two-sided risks to our rate forecasts Our view is that Bank Rate will rise from 4.00% now to a peak of 4.50% and stay there for all of this year before being cut to around 3.00% by the end of next year. But the two-sided risks to our... 24th March 2023 · 6 mins read
UK Economics Weekly Banking situation appears to be stabilising, but risks remain Even if policymakers are successful at putting a firewall around the recent problems in the global banking system, some damage to the UK economy may already have been done. And while we think... 17th March 2023 · 10 mins read
UK Economics Weekly Slimming the size of the possible recession With the hit to real activity from high inflation having been and gone and mostly absorbed by government handouts and a real terms reduction in households’ pandemic savings, we no longer think there... 10th March 2023 · 7 mins read
UK Economics Weekly Improved outlook for inflation, activity and even Brexit It may seem odd that we are revising down our CPI inflation forecast when investors’ concerns about the stickiness of inflation are growing. But the revisions are triggered by the further fall in the... 3rd March 2023 · 8 mins read
UK Economics Weekly Investors’ hawkish shift is justified We don’t think that wage growth will ease to levels consistent with the 2.0% inflation target without weaker economic activity and a rise in the unemployment rate. The recent resilience of the economy... 24th February 2023 · 5 mins read
UK Economics Weekly Domestic inflation easing, but labour market still tight The easing in core services inflation suggests that interest rates won't rise much further, perhaps from 4.00% now to a peak of 4.25% or 4.50%. But we suspect the Bank of England will need to see more... 17th February 2023 · 7 mins read
UK Economics Weekly Recession or no recession, economy will be very weak The resilience of the economy last year is probably due to a combination of the government’s support, the strong labour market and both households and businesses dipping into some pandemic savings... 10th February 2023 · 9 mins read
UK Economics Weekly Data needs to beat BoE’s forecasts for further rate hikes This week the Bank of England implied that Bank Rate is at or very close to its peak, and for further rate hikes to happen there needs to be evidence of more persistent inflationary pressures than it... 3rd February 2023 · 9 mins read
UK Economics Weekly Inflation pressures easing, but too soon to sound the all clear The data this week provided further signs that goods pipeline pressures are easing. More importantly, we’re starting to see the first concrete signs of an easing in services pipeline pressures. But... 27th January 2023 · 4 mins read
UK Economics Weekly Domestic inflation is proving persistent CPI inflation is falling, but domestic inflationary pressures are proving persistent as the labour market remains tight and wage growth remains strong. Combined with a more resilient economy than the... 20th January 2023 · 7 mins read
UK Economics Weekly Recession delayed not cancelled It’s starting to feel like a recession will never happen, but it will. Admittedly, the government may be absorbing more of the hit to national income from the surge in the cost of energy imports than... 13th January 2023 · 9 mins read
UK Economics Weekly UK’s business investment position will get even worse UK investment is already languishing well below that of its G7 counterparts and we suspect its investment and productivity position will worsen relative to its peers by the end of 2024. This raises... 6th January 2023 · 8 mins read