UK Economics Update The implications of higher rates for the housing market Investors have revised up how far they expect the Bank of England to raise interest rates as they continue to digest the tax cuts announced on Friday. This Update examines what the impact on the... 27th September 2022 · 4 mins read
UK Economics Update Chancellor gambles everything on growth The Chancellor claimed that this was a plan for growth. But unless the Chancellor’s gamble pays off and the government’s fiscal policy boosts GDP growth by 0.5-1.0ppts per annum, the risk is that once... 23rd September 2022 · 6 mins read
UK Economics Update Govt’s fiscal plans to force the Bank to hike rates to 4.00% The hawkish 50 basis point (bps) hike in interest rates today, from 1.75% to 2.25%, was partly driven by the government’s plans to dramatically loosen fiscal policy and supports our view that the Bank... 22nd September 2022 · 3 mins read
UK Economics Update Chancellor set to gamble on growth A key prong to the new PM’s economic policy is to increase the size of the economic pie, rather than redistributing it, seemingly funded by higher public borrowing. If the new government’s gamble on... 21st September 2022 · 5 mins read
UK Economics Update Our new interest rate forecast – a peak of 4.00% After fully adjusting our economic forecasts to take account of what is shaping up to be a big fiscal expansion, we now think the Bank of England will raise interest rates from 1.75% currently to a... 15th September 2022 · 7 mins read
UK Economics Update Utility price cap cuts inflation, limits recession and lifts debt It seems that the size and structure of the Prime Minister’s policy to freeze utility prices is broadly as expected and will reduce inflation and limit the size of the recession. But it will come at... 8th September 2022 · 4 mins read
UK Economics Update Utility price freeze an effective but expensive sticking plaster If the new Truss government implements a freeze on domestic gas and electricity prices then inflation may peak at around 11% in October this year, rather than 14.5% in January next year as we... 6th September 2022 · 5 mins read
UK Economics Update What the new PM could, should and should not do The new Prime Minster should acknowledge the size of the economic crisis, announce measures to shelter households and businesses from it, leave the Bank of England’s mandate largely unchanged, create... 2nd September 2022 · 11 mins read
UK Economics Update Our new higher inflation forecast The latest leap in wholesale gas prices means that we now think CPI inflation will rise from 10.1% in July to a peak of 14.5% in January (up from our previous forecast of a peak of 12.5% in October)... 24th August 2022 · 6 mins read
Nordic & Swiss Economics Update Could cheap Norwegian gas fix Europe’s energy crisis? One left-field option for alleviating Europe’s gas crisis that has been doing the rounds is the potential for asking Norway to discount the price of its gas exports. This Update looks at eight key... 24th August 2022 · 6 mins read
UK Economics Update The Bank’s mandate does not require radical change It’s clear in hindsight that the Bank of England kept monetary policy too loose for too long during the recovery from the pandemic. But that does not mean that the mandate given to it by the... 23rd August 2022 · 6 mins read
UK Economics Update What will this recession look like? We expect a recession in 2022/23 to be driven by high inflation, with a contraction in real consumer spending at its epicentre. But with household and corporate balance sheets still relatively healthy... 11th August 2022 · 3 mins read
UK Economics Rising interest costs will add to the pain for households A rise in Bank Rate to a peak of 3.00% wouldn’t dent real consumer spending anywhere near as much as the drag from surging inflation over the coming quarters. That said, it would only compound the... 9th August 2022 · 4 mins read
UK Economics Update Stagflation may require rate hikes to 3% and cuts thereafter While raising interest rates by 50 basis points (bps) today, from 1.25% to 1.75%, the Monetary Policy Committee (MPC) suggested that rates will probably have to rise further to knock on the head the... 4th August 2022 · 3 mins read
UK Economics Update Upheaval at No.10 spells fresh trouble for UK assets We suspect that the latest political turmoil in the UK adds to the reasons to expect a renewed rise in the 10-year Gilt yield, weakness in the pound, and continued trouble for the FTSE 100. In view of... 7th July 2022 · 3 mins read
UK Economics Update The economic implications of the PM’s resignation The news that Boris Johnson plans to resign as UK Prime Minister later today may lead to fiscal policy being a bit looser and monetary policy having to be a bit tighter. At the margin, this lends some... 7th July 2022 · 3 mins read
