UK Economics Weekly BoE’s inflation forecast looks like an outlier The Office for Budget Responsibility’s big downward revision to its CPI inflation forecast in this week’s Budget brings it more into line with our forecast for inflation to fall below the 2.0% target... 8th March 2024 · 9 mins read
UK Economics Weekly Housing leading the economy out of recession The government’s desperation to close the gap on Labour in the opinion polls means surprisingly big tax cuts shouldn’t be ruled out from the Budget on Wednesday despite the fiscal constraints that... 1st March 2024 · 5 mins read
UK Economics Weekly Tax cuts now imply tax rises after the election Whatever the Chancellor gives away in tax cuts in the Budget, the next government will have to take away in the form of tax hikes after the election. This means any fiscal sugar rush for the economy... 23rd February 2024 · 4 mins read
UK Economics Weekly Soft landing intact as mild recession nearing an end It’s debatable whether the small falls in GDP should be considered a recession, although the decline in GDP per capita has been larger. Either way, timely indicators suggest the economy may be coming... 16th February 2024 · 6 mins read
UK Economics Weekly Bad news coming, but better times ahead We’d recommend ignoring any reports on the back of next week’s data releases that the UK economy is heading in the wrong direction on inflation and activity. It may only be a few months before... 9th February 2024 · 11 mins read
UK Economics Weekly Fiscal splurge won’t prevent summer interest rate cut The IMF was not wrong when it pointed out this week that by offering pre-election tax cuts, the Chancellor is turning a blind eye to the precarious state of the fiscal position. To meet his fiscal... 2nd February 2024 · 4 mins read
UK Economics Weekly Deflation risks may be on the horizon Big falls in the Ofgem utility price cap in April and July could mean that CPI inflation falls from 4.0% in December 2023 to just 0.3% by September. If the chances of inflation hovering only a bit... 26th January 2024 · 4 mins read
UK Economics Weekly Is the soft landing in jeopardy? This week’s stronger-than-expected news on inflation and weaker-than expected news on activity doesn’t mean that a soft landing for the economy is no longer the most likely outcome. Instead, there’s... 19th January 2024 · 6 mins read
UK Economics Weekly UK to win the race to get inflation below 2% Even though the next two CPI inflation releases may fuel the narrative that the downward trend in inflation is stalling, we think that inflation in the UK will fall below the 2.0% target in April... 12th January 2024 · 7 mins read
UK Economics Weekly Are we too downbeat on the economy in 2024? The economic news over the past week has highlighted three upsides to our forecast that the economy will stagnate in 2024. First, the fall in some mortgage rates to below 4% means the effect of future... 5th January 2024 · 7 mins read
UK Economics Weekly The good news on inflation should continue in 2024 It is striking that the big fall in UK CPI inflation so far has followed the US closely, albeit with a six month lag. This reflects the fact there have been common drivers of inflation across advanced... 22nd December 2023 · 4 mins read
UK Economics Weekly BoE too hawkish, investors have gone too far the other way We agree with investors that the Bank of England's stance this week was overly hawkish. Even so, we think investors are over-estimating how quickly rates will be cut. Given the UK economy is not as... 15th December 2023 · 8 mins read
UK Economics Weekly Tide turning to earlier rate cuts, but BoE to cut last Investors now think the first interest rate cut will happen in June next year instead of August, with an 80% chance of a cut by May. Our forecast is that the Bank of England won’t cut interest rates... 8th December 2023 · 10 mins read
UK Economics Weekly Cooling labour market will be crucial for rate cuts The possibility that the labour market is tighter than it looked has placed a question mark over when the Bank of England will be able to cut interest rates. Our forecast for services inflation and... 1st December 2023 · 4 mins read
UK Economics Weekly Low tax/low spending rhetoric is fiscal fiction It’s true that the Chancellor’s pre-election splurge unveiled in this week’s Autumn Statement was the biggest tax-cutting package since 1988. But the reality is that the tax burden is still set to... 24th November 2023 · 4 mins read
UK Economics Weekly What the Chancellor won’t tell us The Chancellor will squeeze as much political juice out of Wednesday's Autumn Statement to try and regain the agenda ahead of an election next year. But he won't tell us that bigger pre-election... 17th November 2023 · 7 mins read
