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
UK Economics Weekly Households increase savings despite falling real incomes The economy contracted by more than we previously thought in Q3 2022. But the most surprising thing we learnt was that the saving rate leapt from 6.7% in Q2 to 9.0% in Q3 as households on aggregate... 23rd December 2022 · 5 mins read
UK Economics Weekly 2023 – Key themes and possible surprises The three main economic themes of 2023 will be falling inflation, peaking interest rates and a recession. Together they add up to a tough year. Things would be much tougher if inflation surprised... 16th December 2022 · 7 mins read
UK Economics Weekly Retail recession drags on despite World Cup With retail sales volumes in November likely to have remained a little below their pre-pandemic level and 4.0% below their level at the start of the year, for retailers the recession is well underway... 9th December 2022 · 14 mins read
UK Economics Weekly BoE focus will shift from pace of rate hikes to level of rates The news that higher interest rates are starting to influence the economy will at some point soon prompt the Bank of England to start thinking more about the appropriate level of interest rates rather... 2nd December 2022 · 5 mins read
UK Economics Weekly High migration, but low labour force The most striking thing about the record rise in net migration in the year to June 2022 is that it has not prevented the decline in the labour force. Without the rise in net migration, the labour... 25th November 2022 · 4 mins read
UK Economics Weekly Monetary tightening now, fiscal tightening later With the planned fiscal squeeze coming after 2024/25, the Autumn Statement was not just good politics, but good economics too. Even so, the UK's fiscal consolidation stands out in comparison to the... 18th November 2022 · 7 mins read
UK Economics Weekly Fiscal tightening may come later rather than sooner The big fiscal tightening set to be unveiled by the Chancellor at the Autumn Statement next Thursday is coming just as the recession begins. The clear risk is that the fiscal consolidation deepens the... 11th November 2022 · 9 mins read
UK Economics Weekly Doubting the BoE’s dovish tilt It may seem odd that we are still forecasting interest rates to rise from 3.00% to 5.00% when the Bank of England said this week that it expects rates to peak between 3.00% and 4.00%. But what happens... 4th November 2022 · 9 mins read
UK Economics Weekly Farewell fiscal loosening The reports that Chancellor, Jeremy Hunt, in his Autumn Statement on 17th November will unveil a fiscal tightening of up to £50bn suggests that fiscal policy will soon become a major drag on the... 28th October 2022 · 5 mins read
UK Economics Weekly Prime Minister Liz Truss falls, political risk premium remains We do not yet know which of the three PM hopefuls (Boris Johnson, Rishi Sunak, Penny Mordaunt who have attracted early backing from Conservative MPs) will replace Liz Truss. Whoever is PM, we think a... 21st October 2022 · 5 mins read
UK Economics Weekly Fiscal crisis to market crisis to political crisis The sacking of the Chancellor and the U-turn on corporation tax might not be enough for the government to regain the full confidence of the financial markets. For that to happen, more may need to be... 14th October 2022 · 9 mins read
UK Economics Weekly Three possible flashpoints for the markets The end of the Bank of England’s gilt purchases (14 th October), the publication of the Chancellor’s Medium-term Fiscal Plan (perhaps late this month) and the Bank of England’s next monetary policy... 7th October 2022 · 10 mins read
UK Economics Weekly Five ways the gov’t-induced turmoil has altered our thinking We don’t know yet if the PM and Chancellor installed just three weeks ago will survive the crisis. But the legacy of the Chancellor’s mini-budget on 23 rd September and the resulting events of this... 30th September 2022 · 5 mins read