UK Economics Update Russia/Ukraine generates more upside risk to inflation Today’s grave escalation of the Russia/Ukraine conflict threatens to keep CPI inflation in the UK even further above the 2% target this year and reduce households’ real incomes by even more. The... 24th February 2022 · 4 mins read
UK Economics Interest rates to peak at 2.0% We now think that Bank Rate will rise from 0.50% currently to 1.25% sooner than we previously thought. What’s more, we now expect three more 25 basis point rate rises in 2023, resulting in rates... 9th February 2022 · 7 mins read
UK Economics BoE may hike rates to 1.25% this year despite Sunak’s help While the decisions by the Bank of England to hike interest rates from 0.25% to 0.50% and to start reversing quantitative easing (QE) were both as expected, with four MPC members wanting to raise... 3rd February 2022 · 4 mins read
UK Economics Real wage squeeze unlikely to be a rerun of 2008-14 The looming squeeze on real wages means that the near-term outlook for consumption and GDP has weakened. That said, we don’t expect anything as bad as the squeeze in 2008-14. In fact, real household... 20th January 2022 · 4 mins read
UK Economics Inflation won’t be the fiscal boon many assume While the general perception is that higher inflation is unambiguously good for the public finances, the reality is a bit more nuanced. The Chancellor will almost certainly be gifted with a lower... 12th January 2022 · 4 mins read
UK Economics Six key calls and three risks for the UK in 2022 Our new forecasts for 2022 envisage CPI inflation rising further than most expect to a peak of 7% and the Bank of England raising interest rates quicker, from 0.25% now to 1.25% by the end of the year... 6th January 2022 · 4 mins read
UK Economics A catch-up on COVID Given the huge surge in cases throughout December, the COVID-19 situation is once again set to be the biggest determinant of the performance of the economy over the first few months of 2022. We aren’t... 5th January 2022 · 4 mins read
UK Economics MPC begins lift-off but rates unlikely to soar The surprise hike in interest rates by the Bank of England today, from 0.10% to 0.25%, could just be a case of the Bank moving a bit quicker than expected, but the hawkish tone of the commentary... 16th December 2021 · 3 mins read
UK Economics December looking dismal, but lockdown the real risk Reports that the surge in Omicron COVID-19 cases is causing some people to stay away from work, schools, pubs and restaurants increases the downside risks to our December and January GDP forecasts... 14th December 2021 · 3 mins read
UK Economics Labour shortages to push up wages for a bit longer The latest data suggest that the upward pressure on wage growth from labour shortages has a bit further to run. Admittedly, the discovery of the Omicron variant has clouded the near-term outlook for... 30th November 2021 · 4 mins read
UK Economics Omicron – The risks to GDP and for the BoE The restrictions announced by the government on Saturday in response to the new Omicron COVID-19 variant increase the downside risks to our GDP forecasts and the chances that the Bank of England... 29th November 2021 · 4 mins read
UK Economics Update Export woes not just a Brexit story Brexit is undoubtedly a factor behind the slower post-pandemic recovery in UK exports relative to elsewhere. But doesn’t appear to be the sole reason. Instead, pandemic effects may explain at least... 24th November 2021 · 3 mins read
UK Economics Troubled Brexit waters ahead With speculation rising that the UK will trigger Article 16 of the Northern Ireland Protocol, the big risk is that relations between the UK and the EU sour to such an extent that parts of the whole UK... 11th November 2021 · 7 mins read
UK Economics Which measure of GDP should we believe? The divergence between the quarterly and the monthly measures of GDP have left it unclear whether the economy is still languishing at about 2.0% below its pre-pandemic level or if it is nearing that... 9th November 2021 · 3 mins read
UK Economics Update Rate rises coming, but not as many as the markets expect By leaving interest rates at 0.10% and continuing its QE asset purchases, the Monetary Policy Committee (MPC) didn’t set off any early fireworks today. But it did throw on the bonfire the markets’... 4th November 2021 · 3 mins read
UK Economics Fiscal rules are there to be broken The Chancellor’s new fiscal rules could help to convince voters and investors of the Conservative Party’s fiscal discipline. But with eleven rules having come and gone in the past seven years and with... 3rd November 2021 · 4 mins read
