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 Monthly GDP & International Trade (May) The easing in the pace of the economic recovery in May suggests that GDP is now more likely to return to the February 2020 pre-pandemic peak in October rather than in August. The bigger point, though... 9th July 2021 · 4 mins read
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 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 GDP (Q1 Final) The small downward revision to Q1 GDP growth probably won’t stop the economy from rising back to its pre-pandemic peak in the coming months. And the larger-than-expected rebound in the household... 30th June 2021 · 3 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 Money & Credit (May) The signs that households have started to borrow again provide us with confidence that May’s surprise fall in retail sales was a result of a shift in spending from retailers to other areas as the... 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 IHS Markit/CIPS Flash PMIs (Jun.) The fall in the flash composite PMI from a record high of 62.9 in May to 61.7 in June indicates that the pace of the recovery may have peaked. That suggests the monthly rises in GDP will ease back... 23rd June 2021 · 3 mins read
UK Economics BoE may unwind QE before hiking rates We think there’s a good chance that when the Bank of England’s Monetary Policy Committee starts to tighten monetary policy it will do it by unwinding some quantitative easing before it raises interest... 22nd June 2021 · 25 mins read
UK Economics Public Finances (May) May’s public finances figures suggest the strong economic recovery is starting to feed through into lower government borrowing. This reinforces our view that the tax hikes and spending cuts that most... 22nd June 2021 · 3 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 Retail Sales (May) Rather than suggest the economic recovery is already spluttering, the decline in retail sales in May is probably just a result of the reopening of indoor hospitality in mid-May prompting households to... 18th June 2021 · 2 mins read
UK Economics No tightening until 2024, and then by unwinding QE first Even though the Monetary Policy Committee (MPC) will probably acknowledge in the policy announcement on Thursday 24th June that activity and inflation have been stronger than it expected, we don’t... 17th June 2021 · 8 mins read
UK Economics Consumer Prices (May) With businesses having raised their prices by more than we expected once they reopened after COVID-19 lockdowns ended, we now think CPI inflation will rise to a peak of 2.9% later this year compared... 16th June 2021 · 2 mins read
UK Economics Labour Market (Apr./May) Another strong set of labour market figures released this morning will feed concerns about labour shortages and the possible impact on inflation of higher wage growth. But the level of employment is... 15th June 2021 · 2 mins read
