UK Economics Update OBR’s fiscal warnings can be ignored…for now The Office for Budget Responsibility (OBR) today sent a clear message to the government that regardless of the speed of the recovery, the government debt to GDP ratio is on an unsustainable path. Even... 14th July 2020 · 3 mins read
UK Economics Update Chancellor triggers deflation One consequence of the new policies announced by the Chancellor last week is that the UK will soon enter a period of deflation. But this will be the good form of deflation, which is temporary, boosts... 13th July 2020 · 6 mins read
UK Economics Update BoE can push up the money supply but not inflation A surge in the money supply has piqued fears of a leap in inflation. But in our view, there is little chance that this expansion of the money supply, driven almost entirely by quantitative easing... 9th July 2020 · 4 mins read
UK Economics Update Fiscal support continues, austerity is not even on the horizon The £30bn (1.4% of GDP) of extra measures announced today by the Chancellor may go some way to speeding up the economic recovery from the coronavirus crisis and limiting the long-term hit to... 8th July 2020 · 4 mins read
UK Economics Update UK lagging behind in the recovery race Some indicators suggest the UK is lagging behind other countries in the race to recover from the coronavirus, and it faces some additional hurdles which could slow it down even more. That’s why we... 7th July 2020 · 3 mins read
UK Economics Update Unemployment set to rise further, but not as far as feared Given the success of the government’s job furlough scheme and the signs of a strong initial rebound in economic activity we now think that the unemployment rate will peak later, in June 2021 rather... 2nd July 2020 · 5 mins read
UK Economics Update Further fiscal stimulus to reduce risk of long-term scarring With further fiscal support likely to be unveiled at some point in the next few weeks, the government appears willing to sustain the fiscal stimulus into the years ahead rather than lurch towards... 29th June 2020 · 3 mins read
UK Economics Update Pepys, plagues and pubs If the behaviour of Samuel Pepys after the Great Plague of 1665/66 is anything to go by, then people will be willing to return to offices, shops, pubs and theatres surprisingly quickly once the... 22nd June 2020 · 6 mins read
UK Economics Update MPC will do more QE, eventually We think today’s Monetary Policy Committee decision to keep rates on hold at +0.10% and increase Quantitative Easing (QE) by £100bn is unlikely to be the last act of policy loosening. And while we... 18th June 2020 · 3 mins read
UK Economics Update The consensus is still too optimistic Other forecasters were slow to appreciate the depth of the recession. Since then, the consensus GDP forecast has been revised down close to our own. But we think other forecasters are still... 18th June 2020 · 2 mins read
UK Economics Update ILO be damned? The latest data highlighted a diverging trend between the two main measures of unemployment. Neither measure is perfect, but at least the claimant count is timelier than the ILO measure. Until the ILO... 17th June 2020 · 4 mins read
UK Economics Update Return of risk appetite to benefit UK assets A continued return of risk appetite as the economy slowly recovers from the coronavirus crisis will boost equities and the pound so long as there is a compromise on Brexit. But with the Bank of... 16th June 2020 · 3 mins read
UK Economics Update Brexit will hold back the recovery We assume that a slim trade deal will be agreed by the end of this year and that a big step change in the UK-EU relationship will be avoided. But with the chances of a “no extension, no Brexit deal”... 15th June 2020 · 8 mins read
UK Economics Update High business borrowing is the lesser of two evils The huge amount of borrowing undertaken by firms in the last three months is reassuring in the sense that businesses are getting the cash they need to make ends meet. But some firms won’t be able to... 11th June 2020 · 4 mins read
UK Economics Update Government to live with debt rather than lurch towards austerity Unlike the period after the Global Financial Crisis, we doubt that the government will immediately turn to a prolonged period of austerity after the surge in the debt to GDP ratio during the... 10th June 2020 · 5 mins read
UK Economics Update Will households spend their savings? The bulk of the leap in the saving rate will be reversed as the economy opens and people start spending again but the desire to hold more savings post-lockdown combined with lower incomes will weigh... 10th June 2020 · 3 mins read
