Chief Economist’s Weekly Briefing – To Hike or to Hold

Weaker than expected Euro area growth, unexpected contraction of the US economy and concerns about the Chinese economy, clouded the outlook last week. In the week ahead, the Bank of England is facing the toughest balancing act between curbing recent record high inflation and not weighing too heavily on GDP growth amid a cost-of-living crisis. 

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Chief Economist’s Weekly Briefing – Inflation with a chance of downturn

Disappointing economic data for the UK economy last week: declining retail sales, weakening PMI surveys and falling consumer confidence. To add to that, new projections from the IMF suggest that the UK would have the slowest growth in the G7 in 2023. Weak economic data underlines the balancing act facing the Bank of England, bringing inflation back to target while preserving the recovery.

The Palace of Westminster in London in the evening – England
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Chief Economist’s Weekly Briefing – How High?

The two hallmarks of the economic outlook remain in focus: slower growth and higher inflation. UK inflation hit a 30-year high. But that was surpassed in the US where it hit a 40-year high. While China’s latest lockdown is adding to supply chain stress, driving prices even higher, and contributing to jitters around the global recovery. So too is the war in Ukraine, as the latest forecasts from the World Bank suggest.

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Chief Economist’s Weekly Briefing – Under Strain

Global food production is coming under severe stress as war in Ukraine adds to pandemic-related shocks. Meanwhile, countries also need to curb dependence on fossil fuels, as the UK government outlined its energy strategy putting offshore wind and nuclear power at the centre of policy.  Businesses are grappling with challenges from surging prices to supply chain disruptions and, with inflation rates probably jumping again this week, that will likely continue to be the case.

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Chief Economist’s Weekly Briefing – Tougher Times

April brings an acute squeeze on UK living standards with households facing a 54% rise in energy bills. And that’s far from the end of it. Higher national insurance contributions also start this month. And that’s with inflation already at a 30-year high! Hard to find good news amidst all that. But if there’s some it’s that momentum leading up to the squeeze is a little better than thought: GDP rose 1.3% in the final quarter as opposed to 1% as initially estimated. 

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Household stockpiling two years ago was irrational, countries doing it now is not

Exactly this time two years ago, we thought we were entering a food crisis. People were stockpiling food items in the expectation of supply shortages and empty shelves, despite repeated reassurances from the industry and politicians. The reality was that the food and retail sectors pulled out all the stops to keep the supply lines open and to keep us fed. Today, two years on, though, a new and worrying food crisis is on the cards for different reasons.

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Chief Economist’s Weekly Briefing – Cloudy

The UK economy continued its robust recovery from the pandemic and tax revenues remained strong. However, good news on the public purse have been matched with challenging news for household finances as cost-of-living crisis unfolds. The chancellor announced some support measures with cuts to national insurance and fuel duty, but this won’t offset the projected drop in standards of living.

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Chief Economist’s Weekly Briefing – All rise

Things are going up lately, from inflation, interest rates, energy prices, while covid cases also ticked up. Last week central banks addressed the most important feature of the post-pandemic era, rising inflation, while also acknowledging the hit to growth as a consequence of the war in Ukraine. US Federal reserve announced its first interest rate increase since 2018, and Bank of England completed the third consecutive hike. This week is Chancellor Rishi Sunak’s turn, who is under pressure to use his spring statement to help alleviate the cost-of-living crisis.

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Chief Economist’s Weekly Briefing – From rebound to uncertainty

There’s no doubt the war in Ukraine has clouded the economic outlook. Commodity prices have soared following Russia’s invasion putting more pressure on households’ real disposable income, and dampening growth prospects. But there’s real momentum behind the UK recovery going into this more challenging period, as underlined by last week’s estimate-beating GDP data for January.

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Chief Economist’s Weekly Briefing – War, Peace & Inflation

The Russian invasion injects further uncertainty raising questions about the availability and price of energy, food and other critical raw materials. Oil is the latest market to show this stress, with prices hitting $140 per barrel, close to all-time highs and a record high when priced in sterling (£99pb). In the meantime, the prospect of an acute real income squeeze will provide a significant headwind to spending. All this suggest that inflation will stay higher for longer. Central bankers have a difficult task ahead in balancing growth during a lingering pandemic and rising prices.

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