UK Economics CPI inflation may peak around 4% Bigger rises in commodity and component costs than we had expected mean that we now think CPI inflation will rise from 2.1% in May to a peak of about 4.0% around the turn of the year. But we still... 6th July 2021 · 9 mins read
UK Economics Recovery evolving rather than stalling The recent softening in some indicators of activity is probably mostly a result of shifts in spending patterns within the economy rather than a sign that the recovery has already stalled. As such, we... 29th June 2021 · 3 mins read
UK Economics MPC more optimistic, but no more hawkish Other than the Monetary Policy Committee noting the growing upside risks to inflation alongside today’s policy decision, there were no real signs that it is thinking about tightening policy sooner, à... 24th June 2021 · 3 mins read
UK Economics Four-week delay to Freedom Day not a big blow to the economy A four-week delay to the easing of the final domestic COVID-19 restrictions beyond 21st June is unlikely to prevent the economy from climbing back to its pre-pandemic size by the autumn. And although... 14th June 2021 · 3 mins read
UK Economics Burst of reopening inflation will probably be temporary We suspect that a bout of inflation triggered by the economy reopening will be brief and that a more widespread and sustained rise in inflation that would concern the Monetary Policy Committee won’t... 11th May 2021 · 3 mins read
UK Economics Surge in pipeline price pressures an upside risk to inflation Supply issues have raised price pressures for producers, which they have begun to pass on. But with doubts around the reliability of survey evidence and the limited pass-through to consumer prices... 10th May 2021 · 4 mins read
UK Economics MPC more positive, but tighter policy still some way off While voting today to leave interest rates at +0.10% and the stock of Quantitative Easing (QE) at £895bn, the Monetary Policy Committee (MPC) suggested conditions for tighter policy may be in place in... 6th May 2021 · 4 mins read
UK Economics A wave of insolvencies is coming, but not a tsunami There will be a surge in business insolvencies once the government’s moratoriums expire at the end of June and September. But a strong economic recovery should ensure that fewer businesses go bust... 5th May 2021 · 4 mins read
UK Economics What is the MPC’s forward guidance telling us? When taken together, the Bank of England’s forward guidance and its economic forecasts imply that the Bank may not raise interest rates until late in 2023 at the earliest. That would be later than the... 27th April 2021 · 6 mins read
UK Economics Does it matter if the BoE ends QE before the Fed and ECB? Our expectation that the Bank of England will end quantitative easing (QE) sooner than the US Fed and the ECB is unlikely to mean that UK government bond yields rise much further than elsewhere or... 26th April 2021 · 5 mins read
UK Economics Bounce back in activity begins The early evidence supports our view that the reopening of non-essential retailers and outdoor drinking/dining venues last Monday marked the start of a rapid rebound in economic activity. 19th April 2021 · 3 mins read
UK Economics Update Will households spend the money they have saved? We’ve assumed households just go back to saving the same share of their income as they did before the crisis. That is enough to drive a rapid economic recovery. The upside risk is if households go... 31st March 2021 · 5 mins read
UK Economics Update Higher inflation to push up longer gilt yields Our forecast that the Bank of England will keep interest rates at +0.10% for a few more years and that, as a result, inflation will rise above the 2% target for a prolonged period is consistent with a... 23rd March 2021 · 4 mins read
UK Economics Update No pushback against higher gilt yields, but little prospect of rate hikes The Monetary Policy Committee did not follow in the ECB’s footsteps by stepping up the pace of its QE purchases. Instead, it echoed the message of the Fed by emphasising that rate hikes are still a... 18th March 2021 · 3 mins read
UK Economics Expiry of policy support won’t knock the recovery off course Extensions to many emergency support measures in the Budget, combined with the lockdown easing roadmap, leaves us with a clearer steer on the impact of the eventual withdrawal of government support... 16th March 2021 · 5 mins read
UK Economics Trade trauma is not all due to Brexit and will be temporary Brexit was not the only reason why exports and imports in January were so weak. COVID-19 and statistical breaks are also to blame. And it appears that a good chunk of these effects faded in February. 12th March 2021 · 3 mins read
