Chief Economist’s Weekly Briefing – More to come

Inflation remains firmly in focus as we move deeper into Autumn. September saw a slight softening in price pressures. But it’s a pause before a re-acceleration as higher energy prices bite. In the longer-term, electric vehicles and a decarbonised power system are important remedies. So they are welcome pledges in the government’s Net Zero Strategy.

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Chief Economist’s Weekly Briefing – Fragile

The revision to Q2 GDP indicated that the economy is closer to its pre-pandemic level of output than previously thought. So, while the list of challenges to the recovery mounts – labour, fuel and components shortages, high inflation, soaring energy prices and rising taxes – at least we know the economy faces them with good momentum.

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Chief Economist’s Weekly Briefing – Slowing

The Monetary Policy Committee kept official interest rates unchanged last week, as expected. The big determinant of when they do move will be the the labour market reaction to the end of the furlough scheme. In the meantime, soaring energy prices, rising inflation and worker shortages are continuing. The challenges to the recovery are mounting. But adults in Northern Ireland will have £100 from the High Street Voucher Scheme to soften the blow.

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Chief Economist’s Weekly Briefing – Boiling

UK inflation jumped to 3.2% while the pace of US consumer prices cooled off slightly in July. The UK’s recovery stalled in July as the Delta variant roamed. Meanwhile, job creation remained strong in August as the end of furlough approaches. The future direction of the recovery remains unclear and soaring inflation puts pressure on the Bank of England’s response (which insists that rising inflation will be transitory). Interesting to see Governor Bailey’s response this week and what they intend to do to tame inflation.

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Chief Economist’s Weekly Briefing – Constrained

July’s sharp slowdown in UK GDP growth highlighted the supply- and demand-side challenges to the recovery. Supply chain disruption continues to be widespread and staff shortages remain an issue. Meanwhile, the largest tax shake-up in a decade is aimed at solving short- (Covid) and long-term (social care and ageing) funding challenges.

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Chief Economist’s Weekly Briefing – Wind Down

Covid-19 cases are on the rise again, especially in Scotland, where schools re-started three weeks ago. More data confirming a degree of caution set in amongst consumers mid-summer – UK net consumer credit growth dropped to zero in July and the savings rate is still unusually high. Meanwhile labour shortages appear to be intensifying.

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Chief Economist’s Weekly Briefing – Softer

Supply-side bottlenecks and ongoing struggles to fill vacancies are staging to drag on the recovery. And as we learned through July, rising caseloads can quickly turn consumers cautious. An upsurge in cases as schools return (and evidence of falling vaccine efficacy as time elapses) might conspire to be the next ‘bumpy’ part of the recovery.

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Chief Economist’s Weekly Briefing – Hey, it’s complicated!

Data releases are sending out mixed signals to the Bank of England’s MPC. On the one hand, there is rising evidence of growth slowing in Q3 as consumers turned cautious and firms struggled with supply-side shortages. Yet the labour market continues to recover rapidly with any slack declining fast. The latter could push up wages for longer, risking a firming up inflation expectations.

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