Chief Economist’s Weekly Brief – Record breaking

Amid new rules limiting people’s movement and closing non-essential businesses, data has begun to emerge highlighting the severity of the downturn. PMI indices in the UK, US and EU have all recorded historical lows. Unemployment applications are breaking all records. Fitch, a ratings agency, downgraded the UK sovereign debt, citing the impact on the public finances and the economy.

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Chief Economist’s Weekly Brief – “That was the week that was”

The UK switched its COVID-19 response strategy from mitigation to suppression after it became clear that both the death toll and clinical pressure would be intolerable. Vast swathes of the economy have effectively stopped. And monetary easing and unprecedented levels of fiscal stimulus, while supportive, cannot fully offset this. European countries imposed further civic restrictions, while the US Senate failed to pass the enormous $1.8 trillion package for coronavirus relief. Few weeks have the power of the one we just experienced. And it’s the shock of the new. 

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Chief Economist’s Weekly Brief – Epicentre

Countries put on lockdown, rates slashed, stock markets savaged, trillions poured into the US financial system and an historical Budget in the UK. Last week was shocking as it was breathless. There’s been a sizeable dose of policy stimulus to combat the growing economic fallout of the coronavirus outbreak and the threats to financial stability. There will likely need to be a whole lot more.   

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Chief Economist’s Weekly Brief – Meltdown

Coronavirus has now spread to 104 countries. The Italian government took exceptional measures to put in quarantine 16 million people living in 14 provinces in North Italy, it also announced restrictive measures covering the whole country. The Fed made an emergency 50bp rate cut, but this failed to put a floor under the falling stock market. Oil prices have plunged following OPEC’s failure to cut output, resulting in a price war between Russia and Saudi Arabia.

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Chief Economist’s Weekly Brief – New rules

The new UK points-based migration system was revealed last week. It sets the same rules for immigrants from all countries and will take effect on January 1st 2021. These rules will make it harder for sectors relying on low paid workers to fill the jobs. Northern Ireland has the highest concentration of these jobs within the UK (>1 in 5). The hope is that this will lead to higher productivity due to investment in education and automation. With a record low unemployment rate, the adjustment period is likely to cause some disruption.

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Chief Economist’s Weekly Brief – New Decade, New Chancellor…New Approach?

Name the UK chancellor not to deliver a Budget? Sounds like a Trivial Pursuit question. Sajid Javid may be the first one in 50 years but he is not the only one. Javid’s six-and-a-half months in power did not see him deliver a fiscal set-piece. But he still fared better than Iain Macleod who took ill and died within a month of becoming Chancellor in 1970. Expectations have been raised for the new occupant of 11 Downing Street to embark on a fiscal stimulus.  The economy certainly needs a boost.

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Chief Economist’s Weekly Brief – Catching

Parallels are being drawn between the coronavirus and the SARS outbreak in 2003. But the contours of the world economy have shifted over the past 17 years. China is 17% of global GDP. It was a mere 4% back then. So shuttered business, foregone spending and leisure trips, not to mention the supply-chain disruptions matter much more for the global economy. 

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Chief Economist’s Weekly Brief – Out

The UK has left the European Union. The transition period, during which the UK remains in both the single market and customs union, lasts until the end of the year, with trade negotiations set to start in March. In the background, the Bank of England kept Bank Rate unchanged, but lowered its forecast for the 2019 UK economy to 0.75%.

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