UK Economics Weekly Pressure on the pound to persist We think the markets are wrong to expect the Fed to keep interest rates at their peak for almost as long as the Bank of England. If so, then the recent downward pressure on the pound from the decline... 29th September 2023 · 5 mins read
UK Economics Weekly Electoral cycle to keep rates high, but deepen cuts in 2025 A loosening in fiscal policy next year ahead of a possible election in late 2024 is another reason to think that the Bank of England will keep rates at their current level of 5.25% until late in 2024... 22nd September 2023 · 6 mins read
UK Economics Weekly Employment starting to buckle We’ve been encouraged by the signs that employment is weakening and the labour market is loosening a bit more markedly. What’s more, forward-looking indicators point to employment growth deteriorating... 15th September 2023 · 9 mins read
UK Economics Weekly A more promising outlook for productivity While we don’t think the recent upward revisions to GDP and productivity will prevent the UK economy from performing worse than most expect over the next year or so, we think there are genuine reasons... 8th September 2023 · 9 mins read
UK Economics Weekly BoE to talk up high for long This week the Bank of England’s Chief Economist, Huw Pill, said that he didn’t think interest rates will rise much further from 5.25% now but that rates are likely to stay high for a long time. We’re... 1st September 2023 · 4 mins read
UK Economics Weekly Interest rate medicine is starting to work The phasing out of the government's support packages and the growing drag from higher interest rates probably explain why the economy appears to have lost momentum in recent months. Since these drags... 25th August 2023 · 4 mins read
UK Economics Weekly Rise in rate expectations casts doubt on pre-election tax cuts We would be surprised if the Chancellor is unable to find any cash to deliver some popular sweeteners to the electorate ahead of the next general election. But the latest data are a setback for the... 18th August 2023 · 6 mins read
UK Economics Weekly UK unlikely to follow the US closely this time While the evidence of broad-based, rapid disinflation in the US offers some hope for the UK, we suspect the UK will not quickly follow the US. Instead, we think the UK's recent problems of higher... 11th August 2023 · 7 mins read
UK Economics Weekly Peak does not mean pivot There are two key points to remember as we near the end of the hiking phase of the interest rate cycle and get close to the holding phase. First, a peak in interest rates does not mean that a pivot to... 4th August 2023 · 8 mins read
UK Economics Weekly BoE QE losses unlikely to lead to a big fiscal tightening We doubt the Bank of England’s cumulative net loss from its quantitative easing programme will be a big as the £150bn estimated by the Bank earlier this week. That’s because we don’t think interest... 28th July 2023 · 5 mins read
UK Economics Weekly BoE last to halt hikes and last to cut We think UK core inflation will ease to 2% by the end of 2024 as the effects of the rises in interest rates are felt. But the UK’s more persistent labour supply shortfall than elsewhere suggests this... 21st July 2023 · 5 mins read
UK Economics Weekly Paying particular attention to pay growth The government’s decision to grant pay rises of 5-7% for some public sector workers will probably add to the persistence of inflation and, for the Bank of England, trump the recent easing in some... 14th July 2023 · 9 mins read
UK Economics Weekly Yield curve’s recession warnings could be right this time The gilt yield curve is now the most inverted it has been in 23 years. That’s consistent with our view that a recession is just around the corner. Indeed, we think it’s only a matter of time before... 7th July 2023 · 10 mins read
UK Economics Weekly BoE’s dovish tone is coming back to haunt it The hawkish comments made by the Bank of England Governor, Andrew Bailey, at this week’s ECB annual Sintra gathering marks the latest step by the Bank to get on the front foot in its fight against... 30th June 2023 · 5 mins read
UK Economics Weekly BoE can’t get no satisfaction Judging by the heavy criticism of the Bank of England this week, it seems as though it is dammed if it raises interest rates rapidly and damned if it raises them slowly. While we think some of the... 23rd June 2023 · 6 mins read
UK Economics Weekly Growing pains in the gilt, mortgage and rental markets The surge in gilt yields above the level reached after the Truss/Kwarteng mini-budget last September has pushed mortgage rates even higher and illustrates that most of the drag on real activity and... 16th June 2023 · 10 mins read
