UK Economics Retail Sales (Apr.) The unexpectedly strong rise in retail sales in April suggests the cost of living crisis hasn’t caused consumer spending to collapse and means the economy may have a little more momentum than we... 20th May 2022 · 3 mins read
UK Economics Weak confidence doesn’t make spending crash inevitable The recent collapse in consumer confidence to a near-record low has added to the probability that the UK experiences a recession this year. But households’ large stock of savings and the tightness in... 19th May 2022 · 3 mins read
UK Economics Consumer Prices (Apr.) If the rise in CPI inflation from 7.0% to a 40-year high of 9.0% in April wasn’t bad enough, inflation will probably rise further to 10% in October and will then fall back to the 2% target only slowly... 18th May 2022 · 3 mins read
UK Economics Can the economy handle interest rates of 3%? We estimate that a rise in Bank Rate from 0.10% last November to a peak of 3.00% would mean that GDP is around 2.0% lower than if Bank Rate had stayed at 0.10%. That is a smaller drag than the Bank of... 17th May 2022 · 5 mins read
UK Economics Labour Market (Mar./Apr.) Even though the economy contracted in March and may be on the brink of a recession, jobs growth strengthened, the unemployment rate fell to a 47-year low of 3.7% and wage growth accelerated. This... 17th May 2022 · 3 mins read
UK Economics Next Brexit bust-up risks adding to inflation The UK government’s plan to use domestic legislation to overwrite parts of the Brexit Northern Ireland Protocol risks creating another headwind for the economy and exacerbating price pressures at a... 16th May 2022 · 3 mins read
UK Economics Will the MPC still raise interest rates if there’s a recession? It looks as though the economy is halfway towards a recession. Although the Monetary Policy Committee has never raised interest rates during a recession before (the last time it happened was in 1975)... 13th May 2022 · 7 mins read
UK Economics GDP (Mar. & Q1) It now seems likely that GDP will contract in Q2. And with the full hit of the cost of living crisis yet to be felt, the chances of a recession have just risen. Even so, with price pressures still... 12th May 2022 · 5 mins read
UK Economics Weaker economy yet to dent price expectations The weaker economic outlook triggered by the surge in CPI inflation to a 30-year high of 7.0% in March has yet to put a dent in businesses own expectations for their selling prices. The Bank of... 10th May 2022 · 9 mins read
UK Economics Weakening economy won’t do the MPC’s job The Bank of England’s prediction that the economy is on the brink of recession grabbed the headlines this week, but we suspect its GDP forecast will prove too downbeat. That’s not to say the risk of... 6th May 2022 · 7 mins read
UK Economics Dovish sounding MPC may still raise rates to 3.00% The Monetary Policy Committee (MPC) struck a more dovish tone today while raising interest rates from 0.75% to a 13-year high of 1.00% and saying that it won’t make a decision until after August on... 5th May 2022 · 3 mins read
UK Economics Money & Credit (Mar.) The decent increase in unsecured borrowing in March suggests that the plunge in consumer confidence and fall in real incomes have not caused consumer spending to collapse. This lends some support to... 4th May 2022 · 3 mins read
UK Economics Our new forecasts, pound risks adding to price pressures Even though we think the pound will continue to weaken against the US dollar, from $1.26 now to around $1.22 by the end of the year, that’s unlikely to significantly boost CPI inflation as we think it... 29th April 2022 · 5 mins read
UK Economics Rates heading to 3.0% as MPC focuses on inflation concerns The weakening economic outlook has deepened the dilemma facing the Monetary Policy Committee (MPC). But we think the MPC is sufficiently worried about rising price/wage expectations to raise Bank Rate... 28th April 2022 · 8 mins read
UK Economics 3% is the magic number for interest rates Our new forecast that interest rates will be raised from 0.75% now to a peak of 3.00% next year is more hawkish than the peak priced into the financial markets (2.50%) and the peak expected by the... 27th April 2022 · 5 mins read
UK Economics Public Finances (Mar.) Total borrowing for the 2021/22 fiscal year overshot the Office for Budget Responsibility’s (OBR) March 2022 forecast by some £24bn, rounding out the third-worst year for the public finances on record... 26th April 2022 · 3 mins read
