As countries age, falling working-age populations will make it harder to sustain growth in the size of the labour force. Lessons from countries that are already advanced in the ageing process suggest that the drag can be offset by raising female labour …
28th March 2023
The Help to Buy: Equity Loan scheme was designed to counter an alarming drop in housebuilding and home ownership among young adults. It succeeded to some extent on both fronts, so the loss of the policy when the housing market is in the midst of a …
22nd March 2023
US banks’ problems may have only just begun, but we doubt a Global Financial Crisis 2.0 is on the cards. As is well known by now, last year’s surge in bond yields, stemming from a dramatic increase in interest rates, caused US commercial banks to rack …
17th March 2023
The Budget has taken a bit of a backseat given the renewed worries about the health of the global banking system, but the Chancellor, Jeremy Hunt, was a bit more generous than we expected and probably plans to splash more cash ahead of the 2024/25 …
15th March 2023
The fracturing of strategic supply chains into US and China trade blocs threatens Australia’s existing significant trade with China but also presents Australia with an opportunity to align its trade relationships with its existing security …
We expect the Spring Budget on 15 th March to contain some giveaways confined to 2023/24. But a downgrade to the Office for Budget Responsibility’s (OBR) medium-term GDP growth forecasts will prevent an unwinding of the £54bn (1.8% of GDP) of fiscal …
8th March 2023
We think that most – perhaps two thirds – of the drag on activity from tighter monetary policy in advanced economies is still to come through in 2023. So, despite some surprisingly resilient data recently, we are sticking to our forecasts for advanced …
7th March 2023
Click here to view an online briefing with our team about China's economic plans. It was recorded on 6th March, 2023. The economic plans that have been detailed at the National People’s Congress are more cautious and restrained than had seemed likely …
6th March 2023
Labour markets look very tight in Central Europe and a handful of other EMs (particularly in Latin America), and we think that wage growth is unlikely to fall far enough in these countries to bring inflation back to target in the near future. One …
2nd March 2023
We expect the wheat price to remain high this year as events in Ukraine and drought in other key producers hurt supply. Although the wheat price should drop back after this, the worsening impacts of climate change will put prices back on an upward trend …
22nd February 2023
The near-term economic outlook for Korea is very poor, with falling real incomes, problems in the housing market and weak global demand all set to weigh on prospects this year. Our forecast is that the economy will grow by a below-consensus and …
21st February 2023
Q uantitative tightening and the repayment of TLTROs mean that the ECB’s assets are likely to decline by around one quarter by the end of 2024. We expect the repayment of TLTROs to have a negligible macroeconomic impact. QT should also proceed smoothly, …
20th February 2023
As things stand, we think it is unlikely that non-bank financial intermediaries (NBFIs) would trigger a major financial crisis comparable to the Global Financial Crisis (GFC) . The biggest risks relate to potential liquidity mismatches in open-ended …
15th February 2023
If it isn't already, India will soon be the world’s most populous nation. But this doesn’t mean that policymakers can simply wait for the economic benefits to arrive. The key to unlocking India’s demographic potential is to develop the manufacturing …
The energy crisis in Central and Eastern Europe (CEE) has lost some of its bite as natural gas prices have slumped and countries have made good progress in replacing Russian energy supplies. This has brightened the near-term outlook and reduced the risk …
6th February 2023
Canada has built fewer new homes relative to population growth than other advanced economies, but this alone cannot explain the much larger rise in house prices during the last decade. Looser credit conditions have played the dominant role by far, with …
1st February 2023
The slowdown that we expect in Brazil’s economy should take some steam out of the labour market, but it looks like it won’t be enough to stop wages from rising at a rapid pace. This appears to be a bigger risk to the inflation outlook than the fiscal …
There is a touch of the Dr Jekyll and Mr Hyde about China’s climate credentials, with its well-documented record of burgeoning emissions and reliance on coal standing in stark contrast to its increasing influence over the supply of green technology. The …
31st January 2023
We forecast the 10-year Treasury yield to decline between now and the end of the year, as inflation eases further and the Fed transitions to monetary loosening. A key risk to this projection, in our view, is the weak outlook for demand for Treasuries, …
26th January 2023
Inflation looks to have peaked across Emerging Asia, and is likely to fall back more sharply than most analysts expect over the coming year as fuel price inflation drops, the disruption from the pandemic eases and economic growth slows. With inflation …
The shift away from variable towards fixed-rate mortgages in many European countries over the past 15 years means that it will take longer than in the past for interest rate hikes by the ECB to feed through to household interest expenditure. This …
23rd January 2023
Labour’s big lead in the polls raises the question of what difference a Labour government would make to the economic outlook. The answer is probably not much. A tight grip on the public finances is likely by whichever party is in charge. And the …
9th January 2023
As the economy slides into a mild recession in the first half of next year, triggering a rebound in the unemployment rate to almost 5% by end-2023, the resulting slowdown in the growth rates of wages and unit labour costs will play a supporting role in …
30th November 2022
The Ukraine war has sent the risk of Russian cyberattacks on the West soaring up the agenda, with an attack on critical infrastructure potentially bringing whole economies to a halt. In most cases, a few days of disruption would not actually put much of …
22nd November 2022
Voters in Turkey head to the polls in 2023 and if the ruling People’s Alliance and President Erdogan cling on to power, the authorities are likely to double down on their “new economic model”, raising the threat of simultaneous currency, banking and …
21st November 2022
In his Autumn Statement, the Chancellor, Jeremy Hunt, appears to have pulled off the tricky task of reassuring the financial markets of the government’s fiscal discipline while also managing not to deepen the recession. Our economic forecasts suggest he …
17th November 2022
Next year will be characterised by falling headline inflation, which should help to prevent interest rate expectations and bond yields from rising much further. But we also expect core inflation to remain above 2% for some time. As a result, we think …
Higher interest rates and larger private sector debt burdens mean that debt interest service ratios could rise to levels last seen in the 1990s in many EMs next year. This is unlikely to be a major problem in a handful of EMs such as South Africa, India …
The “global” pledge to cut methane emissions by 30% this decade is a worthy aim, but the fact that the world’s biggest emitters have not signed up is far from helpful, and many of the obvious ways to reduce emissions should happen in spite of …
16th November 2022
We’ll be discussing the implications for the economy and the financial markets of the Autumn Statement in a 20-minute online briefing at 4pm GMT on 17 th November. (Register here .) In his Autumn Statement on 17 th November the Chancellor, Jeremy Hunt, …
10th November 2022
Despite the unanticipated strength in recent months, there are still good reasons to expect core inflation to fall markedly next year. That moderation will not require a deep recession and/or significant rise in the unemployment rate, although we do …
2nd November 2022
Brazil’s economy has a deep-seated problem of low productivity growth and it’s hard to see either presidential candidate undertaking the reforms needed to lift investment, strengthen competitive forces and tackle skills shortages. As a result, with the …
28th October 2022
While the UK government’s apparent U-turn on fiscal policy offers some hope of relief for sterling, we think the outlook remains precarious. We continue to expect that sterling will lose further ground against the US dollar in the near term. But while …
20th October 2022
As the new Chancellor, Jeremy Hunt, unveils whether, when and how he will put public debt on a sustainable path in his Medium-Term Fiscal Plan on Monday 31 st October, the big question will be whether his actions will be enough to restore credibility …
Spillovers from the war in Ukraine and tighter external financing conditions have exacerbated strains in Egypt’s balance of payments and we think the pound needs to fall a lot further. This will add to inflation pressures, prompting further interest rate …
13th October 2022
We think online demand will continue to be an important driver of relative rental prospects in European industrial markets as we move into the post-pandemic era. But the outlook for traditional demand, rental affordability and supply will also play a …
12th October 2022
Our economists discussed what to expect from the Party Congress and answered client questions in an online Drop-In. The recording can be viewed here . The Party Congress will deliver a major reshuffle of China’s leadership but, with General Secretary …
11th October 2022
The purpose of this Focus is to introduce our new dedicated Climate Economics research. It is split into three sections. This first looks at how our coverage will be structured and what topics we will focus on. The second introduces our Climate Databank …
10th October 2022
Fracturing will be felt very differently by markets in different parts of the world. Sectors within US-aligned markets where ties with China are most likely to fracture could see significant ructions. But we expect little impact on most bond and …
6th October 2022
Fracturing of global economic and financial ties will lead to shifts in supply chains, and reduced technology and investment flows between US- and China-centred blocs over the coming decade. Geopolitical considerations will play a greater role in …
In a fractured world, the role of global institutions is likely to decline even further. The consequences of weakened multilateral economic institutions (e.g. the IMF and World Bank) would be felt most heavily in emerging markets by reinforcing the …
The globalisation witnessed over recent decades has manifested itself in increased flows of trade, capital and people. We have already discussed what the fracturing of the world economy might imply for the first two of these; now we explore what it will …
The trend towards ever more “financial globalisation” has already decelerated and will probably slow further as the global economy fractures and policymakers favour resilience over efficiency. While a disorderly rupture of financial relations remains …
China’s dominance in the supply of some key materials needed for the green transition means that US-aligned governments will continue efforts to secure supplies from “friendly” sources, which could add to the cost of greening economies in the short …
Fracturing will not be felt as globalisation in reverse – apart from a few categories of goods deemed politically sensitive or strategically important, most trade between the US and China blocs will continue as before. Where production does shift away …
The shocks caused by the pandemic, the war in Ukraine and US-China tensions will have a lasting impact on the world economy, reversing decades of global integration in some areas while strengthening ties in others. In this series of reports we map out …
The credibility of Brazil’s spending cap – the country’s key fiscal anchor – has been seriously undermined by tweaks and workarounds since the start of the pandemic. And it looks likely that the cap will be weakened further after October’s presidential …
21st September 2022
The post-pandemic recovery in travel and tourism still has some way to go in parts of the world that have been slower to lift restrictions, such as in Asia. And China’s reluctance to move away from its zero-COVID approach means tourism for leisure …
15th September 2022
While Luiz Inácio Lula da Silva (better known simply as Lula), the front-runner in Brazil’s presidential race, has been vague about his policy stance, one common theme from his campaign is nostalgia for his previous presidency of 2003-10. The experience …
14th September 2022
The continued resilience of the economy means that the RBA will have to raise rates more sharply than most expect, which in turn will result in a more severe slowdown in activity than widely anticipated. However, the more benign nature of the recent …