UK Economics New BoE and gilt yield forecasts This week’s signs that two members of the Monetary Policy Committee have become more worried about the upside risks to inflation have led us to bring forward our forecast of when policy will be... 16th July 2021 · 7 mins read
UK Economics Less scarring means lower inflation and higher tax revenues The bigger and longer-lasting rises in commodity and component costs means that we now think that CPI inflation will rise to a peak of 4.0% at the turn of the year. But if we are right in thinking the... 9th July 2021 · 6 mins read
UK Economics No need to fear as furlough enters final furlong We think that concerns about the winding up of the furlough scheme are overdone for two reasons. First, at the end of May only 2.3m people were on furlough and half of them were working at least some... 2nd July 2021 · 7 mins read
UK Economics Weekly BoE’s less hawkish stance relative to the Fed likely to persist With few signs the Fed’s hawkishness at its May meeting has spread to the Bank of England, we think that the downward revision to market interest rate expectations has much further to go. While we... 25th June 2021 · 7 mins read
UK Economics Pay growth less inflationary than it looks, England v Scotland The recent jump in pay growth has mainly been driven by base and compositional effects and is therefore less inflationary than it appears at first glance. That’s one reason why we think inflation will... 18th June 2021 · 6 mins read
UK Economics Inflation fears, Euro 2020 hopes The mounting evidence that price pressures are rising is a threat to our forecast that CPI inflation won’t spend a long time above the 2% target until late in 2023. The good news, though, is that if... 11th June 2021 · 7 mins read
UK Economics Weekly Households still amassing excess savings, 3rd wave fears We don’t think that consumers’ reluctance to pay for their purchases on plastic, or their still-elevated cash holdings, are signs that they will be less willing to spend in the future. Meanwhile, the... 4th June 2021 · 7 mins read
UK Economics Weekly Troubles in construction unlikely to be repeated elsewhere Output in the construction sector was already 2.3% above its pre-crisis level in March and there is evidence that supply constraints are starting to bite. However, there is still plenty of spare... 28th May 2021 · 4 mins read
UK Economics BoE to unwind QE before it raises interest rates The rapid rebound in economic activity revealed by this week’s data releases has started to prompt some questions about when and how the Bank of England will tighten monetary policy. Our answers are... 21st May 2021 · 5 mins read
UK Economics Rapid recovery and rising inflation risks The 2.1% m/m gain in GDP in March added to other evidence that the economy is recovering more rapidly from the COVID-19 crisis than even our above consensus view had suggested. As a result, we have... 14th May 2021 · 8 mins read
UK Economics Weekly BoE unlikely to beat the Fed to higher rates Despite the Bank of England’s more hawkish rhetoric, we doubt it will beat the Fed to higher interest rates. Meanwhile, the news that the Conservatives appear to be performing well in Thursday’s local... 7th May 2021 · 8 mins read
UK Economics Weekly Rise in capital stock diminishes risk of severe scarring The small rise in the net capital stock last year is an encouraging sign that the pandemic won’t damage large parts of the capital stock and leave the level of GDP lower forever more. And while we... 30th April 2021 · 4 mins read
UK Economics UK would win the European GDP Super League If there were an economics version of the European football league, which started up and collapsed this week, where success depended on where GDP is at the end of 2022, then the UK may win with... 23rd April 2021 · 3 mins read
UK Economics Haldane’s MPC departure not as dovish as it first appears Amid the reopening of shops and pubs this week, it was the subtler news that the MPC’s arch-optimist Andy Haldane is leaving the MPC at the end of June that caused a reaction in the markets. At the... 16th April 2021 · 10 mins read
UK Economics Economy has a spring in its step It remains to be seen if this week’s news on the AstraZeneca COVID-19 vaccine further slows the UK’s vaccination rollout. But as the government says it is still on track to vaccinate all adults by the... 9th April 2021 · 7 mins read
UK Economics Weekly Stronger investment reduces risk of scarring, US-UK trade war unlikely The better news on business investment gives us even more confidence in our view that there probably won’t be much, if any, long-term scarring from the pandemic. At the same time, we are not concerned... 1st April 2021 · 4 mins read
