Economic voice

24 March 2023

Today’s 25-basis points (bps) hike takes interest rates to 4.25%, the highest level in 15 years. There are good reasons to think that this is now the peak – the Monetary Policy Committee (MPC) reiterated that it will need to be surprised by the economic data in order to raise rates further.

17 March 2023

It was already a 50:50 call as to whether the Monetary Policy Committee (MPC) would hike interest rates next week, even before the latest turbulence in financial markets. It now looks like the MPC will probably press pause on its tightening cycle a little early, but may include some hawkish forward guidance if inflation indicators don’t move the right way.

16 March 2023

Economists Joe Brusuelas and Tom Pugh discuss the role of trust in modern commerce and why it is so crucial now after the fall out of the SVB.

16 March 2023

As news of concerns over Credit Suisse circulate, RSM economists, review what measures have been put into place to protect the bank and limit any further fall out. 

13 March 2023

We examine some of the challenges and opportunities that UK businesses looking to expand into the US should be thinking about.

14 March 2023

The slowdown in private sector pay growth will embolden those on the Monetary Policy Committee (MPC) who think that interest rates have already risen by enough to bring inflation back to the 2% target.

13 March 2023

The 0.3% m/m bounce-back in GDP in January is more related to the return of Premier League football after the World Cup hiatus than genuine underlying economic strength.

03 March 2023

The UK and most other developed economies have been surprisingly resilient this year in the face of record-breaking falls in real incomes and a huge rise in interest rates.

01 March 2023

The increase in consumer credit to £1.6bn in January, the highest borrowing since June 2022, combined with another relatively low increase in household savings suggests that consumers are becoming more willing to start spending again.

21 February 2023

The surprise rise in the S&P/CIPS Composite PMI to 53.0 (a reading above 50 means activity is growing), the highest since the middle of last year, suggests the anticipated recession will be mild. Indeed, it’s touch-and-go as to whether the UK falls into a recession at all.

15 February 2023

The big drop in inflation to 10.1%, from 10.5% in December, is encouraging. But the more important news is the large drops in core and services inflation.

14 February 2023

Pay growth in December was still too hot for the Monetary Policy Committee (MPC) to pause its tightening cycle. At 6.7%, earning growth is still double the 3% - 3.5% that the MPC thinks is compatible with 2% inflation.

14 February 2023

Tom Pugh, Economist at RSM UK, Joe Brusuelas, US Chief economist at RSM US, and Simon Hart, Lead international partner at RSM UK hosted a lively panel discussion this week on what lies ahead for the global, US and UK economies in 2023 and how these macro conditions will impact UK businesses.

10 February 2023

There are clear signs that the economy has deteriorated over the last few months; GDP fell by 0.5% in December after growing by 0.1% in November.

02 February 2023

Today’s 50 basis points (bps) hike takes interest rates to 4.0%, the highest level in 15 years. But the language in the minutes of the report suggests that the end is in sight for the Bank of England’s (BoE) tightening cycle.

31 January 2023

Consumers are struggling and behaving more cautiously in the face of the impending recession, with many saving more and almost certainly reducing their total spending.

30 January 2023

A stubbornly tight labour market, sticky core inflation and a more resilient economy mean the Monetary Policy Committee (MPC) will almost certainly raise interest rates again at its next meeting on Thursday, 2 February. The only question is, by how much?

24 January 2023

Time to buckle up, the economy is now almost certainly in a recession. The fall in the S&P/CIPS Composite PMI to 47.8, a two-year low, signals that, after showing some resilience at the end of last year, the economy probably contracted in January.

18 January 2023

The drop in inflation to 10.5% in December firmly establishes that inflation is on its way down.

16 January 2023

The record-breaking drop in household’s real incomes in 2022 and 2023 means that consumer spending is heading for a sharp fall this year after dropping by 1% q/q in Q3 2022.

13 January 2023

There is now a chance that overall growth in Q4 might be positive, if GDP falls by less than 0.4% m/m in December, after the surprise 0.1% month on month rise in GDP in November (consensus -0.3% m/m).

05 January 2023

Consumers are struggling and behaving more cautiously in the face of the impending recession, with many saving more and almost certainly reducing their total spending.

16 December 2022

Today’s 50 basis points (bps) hike takes interest rates to 3.5%, the highest level in 14 years. But this smaller increase suggests that the end is in sight for the Bank of England’s (BOE) tightening cycle. However, the minutes of the meeting made it clear that, although the end is in sight, there are still more hikes to come. We expect rates to rise to 4.5% early next year and that they won't start to be cut again until early 2024.

12 December 2022

2023 is expected to be an exceptionally tough year for the UK economy. The UK is almost certainly already in a year-long recession, one that will probably prove to be deeper than that experienced in the early 1990s.

18 November 2022

Today’s Autumn statement came in largely as expected with total tax rises and spending cuts of around £55bn, roughly split between tax rises and spending cuts.

16 November 2022

The rise in inflation to 11.1% in October probably marks its peak. Given that inflation was considerably stronger than the 10.9% figure expected by the central bank, or the 10.7% median that economists had forecast, it raises the chances that the Bank of England will opt for a 0.5 percentage point (ppt) rise in interest rates in December.

15 November 2022

The labour market is still red hot, thanks in no small part to soaring levels of sickness, which hit a record high in September. This is pushing up pay growth and makes it more likely that the Monetary Policy Committee (MPC) will have to raise rates again in December.

11 November 2022

The 0.6% month on month (m/m) drop in GDP back in September means that GDP fell by 0.2% quarter over quarter (q/q) in Q3 this year. This probably marks the start of a recession that will last until Q3 2023. We will likely see GDP fall by about 2.5%, as the cost-of-living crisis is compounded by a cost-of-borrowing crisis and austerity mark 2.

03 November 2022

Today’s 75 basis points (bps) rise in interest rates might be the largest in 33 years and takes interest rates to 3%, the highest level since 2008. However, the commentary that accompanied that decision was decidedly dovish.

01 November 2022

Consumers are becoming more cautious in the face of the impending recession. They are borrowing less, saving more and almost certainly reducing their spending.

31 October 2022

A stubbornly tight labour market, soaring inflation and a significant increase in interest rate expectations mean the Monetary Policy Committee will almost certainly go big at its next meeting on Thursday, 3 November. The only question is, how big?

24 October 2022

Time to buckle up, because the economy is almost certainly in a recession now. The fall in the S&P/CIPS Composite PMI to 47.2 in October suggests that growth will fall in Q4. The index is at its lowest level since March 2009, excluding months of lockdowns.

19 October 2022

The rise in inflation to 10.1% in September makes it even more likely that the Bank of England will opt for a super-size rate hike of a full percent at its meeting on 3 November.

12 October 2022

The economy is already in a recession. There was a 0.3% month-on-month drop in GDP in August, and it will inevitably take another dip in September due to the extra Bank Holiday for the Queen’s funeral.

11 October 2022

There are some tentative signs that demand for labour started to ease in August. But the labour market is still red hot, thanks in no small part to soaring levels of sickness, which hit a record high in August. This is pushing up pay growth, and makes it more likely that the Monetary Policy Committee will opt for a jumbo rate hike of 1% in November.

07 October 2022

Here are the answers to the five most common questions we’re asked about why interest rates are rising, how high they’ll go, the impact on the economy and the housing market, and how long we think rates will stay high.

23 September 2022

The new Chancellor’s “mini Budget” turned out to be more like the full fat version. Admittedly, the tax cuts announced today will give a boost to the economy of roughly 1% over the next year compared to under the previous fiscal plans. That reduces the risk of a protracted recession over the winter.

22 September 2022

A super tight labour market, soaring inflation and a massive fiscal stimulus mean that today’s 50 basis points (bps) hike in interest rates probably won’t be the last large rise. We expect interest rates to peak at 3.5% early next year, but a peak of 4% is also possible.

22 September 2022

It’s official: Prime Minister Liz Truss has announced that the average household’s energy bill will be frozen at £2,500 for two years. This will significantly reduce inflation in the short-term and, rather than peaking at 15% in January, inflation will rise to around 11% in October and fall back much more quickly next year.

21 September 2022

A stubbornly tight labour market, soaring inflation and wandering inflation expectations mean the Monetary Policy Committee will probably opt for another 50bps hike at its next meeting on Thursday, 15 September.

08 September 2022

It’s official: Prime Minister Liz Truss has announced that the average household’s energy bill will be frozen at £2,500 for two years. This will significantly reduce inflation in the short-term and, rather than peaking at 15% in January, inflation will rise to around 11% in October and fall back much more quickly next year.

30 August 2022

Consumers are already battening down the hatches against what will almost certainly be an exceptionally tough winter. July saw a drop in borrowing, and a rise in saving.

26 August 2022

It’s official: The energy price cap will rise by 80%. This will push inflation to around 13% in October, but even that won’t be the end of it. The huge surge in wholesale prices means there is likely to be another rise in the energy price cap in January, sending inflation to a peak of 15% – its highest level since 1980.

17 August 2022

Inflation hit double digits for the first time since the early 1980s in July – and there is worse to come. Given the huge surge in natural gas prices over the last month, expect inflation to reach at least 13% in October.

17 August 2022

The labour market remains very tight. June’s figures show that regular pay growth leapt to 4.7%, and employment growth was 160,000.

12 August 2022

The UK economy showed more resilience than expected in June. Yes, GDP contracted by 0.6% month-on-month (m/m) in June, meaning that output dropped by 0.1% on the quarter. But much of this can be explained by the extra bank holiday in June and fewer coronavirus vaccinations. The UK’s real economy held up reasonably well.

05 August 2022

The Bank of England’s first 50 basis points (bps) rise in almost 30 years will also be its last of that magnitude. With a recession equivalent to that of the 1990’s now looking inevitable, the Monetary Policy Committee (MPC) is likely to conclude that further large rises are likely to do more harm than good.

29 July 2022

The Monetary Policy Committee seems set to give us the biggest rise in interest rates since 1995. It looks like the latest data showing a robust labour market and soaring inflation will be enough for the MPC to make good on its promise to ‘act forcefully’ in response to more persistent inflation.

29 July 2022

Consumer behaviour in June points to more borrowing and less saving. Borrowing jumped while savings dropped sharply, an indication as to how consumers are protecting their lifestyles from the surge in inflation.

22 July 2022

Time to buckle up, because economic growth is in for a bumpy ride over the next year or so. The small fall in the S&P/CIPS Composite PMI to 52.8 suggests that the economy didn’t start Q3 with a bang, but it isn’t signalling a recession either. More encouraging were the drops in both in input and output prices balances, which hint that inflation pressure may be starting to ease.

20 July 2022

Another above-expectations rise in inflation to 9.4% means prices are still rising at the fastest rate in more than 40 years. Pressure is now on the Monetary Policy Committee to raise interest rates by a more aggressive 50 basis points (bps) at its next meeting in August – especially as there is plenty of evidence that inflation is becoming more broad-based. We can expect interest rates to reach 2.25% by the end of the year.

19 July 2022

The huge jump in the number of people employed in the three months to May, combined with the tick up in underlying wage growth, significantly raises the chances of the Monetary Policy Committee (MPC) hiking up rates in August.

13 July 2022

The economy looks stronger today than it did just yesterday, thanks to a 0.5% month-on-month (m/m) rise in GDP in May and upward revisions to the figures for March and April.

07 July 2022

The replacement of Rishi Sunak as Chancellor of the Exchequer with Nadhim Zahawi probably means fiscal policy will be looser for the rest of this year than we previously thought. However, the new Chancellor will have to be careful that any extra spending or tax cuts don’t feed inflation and prompt the Bank of England (BoE) to raise rates by more, cancelling out any positive benefit to the economy.

01 July 2022

The rise in borrowing in May suggests that consumers are borrowing more and saving less to protect their lifestyles from the surge in inflation. However, the rise in borrowing was only small, suggesting that households are cautious about taking on extra debt. As a result, we still expect GDP to shrink by 0.5% q/q in Q2.

30 June 2022

The economy is not experiencing a post-pandemic growth spurt, to put it mildly. The GDP rise of 0.8% quarter-over-quarter (q/q) in the first quarter will almost certainly be followed by a contraction in the second, potentially of 0.5% q/q.

23 June 2022

Time to buckle up, because economic growth is in for a bumpy ride over the next year or so. The stabilisation in the S&P/CIPS Composite PMI at 53.1 suggests that the economy probably didn’t contract again in June, but it doesn’t imply much of an improvement either.

22 June 2022

The tick up in inflation to 9.1% means prices are rising at their fastest rate in more than 40 years. This will pile pressure on the Monetary Policy Committee (MPC) to raise interest rates by a more aggressive 50 basis points (bps) at its August meeting. We expect interest rates to reach 2% by the end of the year.

16 June 2022

Interest rates are now at their highest level since the global financial crisis of 2008. The Bank of England has lifted interest rates by 25 basis points (bps), marking the fifth consecutive hike and taking interest rates to 1.25%. We still expect another three hikes of 25bp this year, which would send interest rates to 2%.

14 June 2022

The risk of a recession later this year has just increased. The 0.3% m/m slump in GDP in April pretty much guarantees that GDP will shrink in Q2, perhaps by as much as 0.4%. However, April’s GDP data is not as bad as it looks.

14 June 2022

The tick up in the unemployment rate and slowdown in total weekly earnings could be the first signs that the weakening economy is starting to feed through into a softer labour market.

01 June 2022

The latest money and credit figures suggest that consumers are increasingly borrowing more to protect their lifestyles from the surge in inflation.

31 May 2022

The risk of a UK recession shrank today after the Chancellor announced extra fiscal spending that will also boost GDP growth by around 0.2%.

26 May 2022

There are signs that the economy contracted in May. The S&P/CIPS Composite PMI has slumped 6.4 points to a 15-month low of 51.8. Indeed, the drop was the index’s fourth largest on record and was almost entirely driven by a dive in the output index.

18 May 2022

The jump in inflation to 9% means prices are rising at their fastest rate in more than 40 years. This will pile pressure on the Monetary Policy Committee (MPC) to raise interest rates again at its next meeting on 16 June.

17 May 2022

The Monetary Policy Committee (MPC) may have the justification it needs to raise rates again at its next meeting on 16 June.

12 May 2022

The economy lost even more momentum over the last few months than we expected. The slowdown is thanks to a 0.1% m/m drop in GDP in March, combined with the downward revisions to growth in January and February.

09 May 2022

The Monetary Policy Committee (MPC) still desires to bring about price stability, and so has raised interest rates from 0.75% to 1%. This marks the first time the MPC has raised rates at four consecutive meetings, and rates are now at their highest level since the financial crisis.

05 May 2022

At the Monetary Policy Committee’s (MPC) next meeting on 5 May, we’re expecting a unanimous vote to raise interest rates from 0.75% to 1.00% and for the committee to announce that it will start selling bonds.

25 April 2022

The sharp drop in the S&P/CIPS Composite PMI suggests the impact of the war in Ukraine is starting to take a heavy toll on business confidence in the UK, although it isn’t pointing to a collapse in output yet.

21 April 2022

Despite the huge drop in real incomes this year, we think the UK will narrowly avoid recession due to the strength of household balance sheets, a tight labour market and the timing of the peaks in inflation and bank holidays this year.

13 April 2022

Prices are rising at the fastest rate in more than thirty years. The jump in inflation to 7% will pile pressure on the Monetary Policy Committee (MPC) to raise interest rates again at its next meeting on 5 May – and that won’t be the end of it.

12 April 2022

The Monetary Policy Committee (MPC) may have all the justification it needs to raise rates again at its next meeting on 5 May. The drop in the unemployment rate to 3.8% in February and the rise in pay growth to 5.4% suggests the labour market is continuing to tighten and, combined with soaring inflation, this could strengthen the MPC’s case for interest rate rises.

11 April 2022

The cost-of-living crisis and supply chain disruption mean GDP growth is set to slow sharply, despite the 0.1% m/m rise in February that suggests first-quarter growth is set to come in at around 1% q/q.

08 April 2022

This year is likely to be remembered for the sharpest drop in household incomes on record, thanks to a dramatic surge in inflation. Household incomes might not start rising again until the second half of 2023, when inflation drops back. We may not see a return to current levels until 2024.

06 April 2022

The RSM UK supply chain index has rebounded over the last few months suggesting that events in Ukraine have not started to materially impact UK supply chains yet. However, the war in Ukraine and coronavirus-related lockdowns in China mean supply chains are likely to come under renewed stress over the rest of this year, before they have even recovered from the pandemic.

31 March 2022

Despite appearances of good health, GDP growth will weaken shortly and will not regain its strength before the end of the year. We expect GDP growth of just 3.5% in 2022 – that’s less than half of the 7.4% rise we enjoyed in 2021.

29 March 2022

The latest money and credit figures suggest that consumers are increasingly borrowing more to protect their lifestyles from the surge in inflation. We expect to see higher borrowing and lower saving rates over the rest of the year as the cost-of-living crisis starts to bite.

23 March 2022

Nine billion may look like a big number, but sometimes looks are deceiving. The £9bn in extra support announced by the Chancellor this afternoon will go only a little way to easing the burden on households over the rest of this year. That’s because we’re still expecting inflation to peak at more than 8%, and to be above 6% at the end of the year.

23 March 2022

British inflation is now at a 30-year high. Another surge in goods inflation pushed February’s rate to 6.2%, and it hasn’t been this far above the Bank of England’s 2% target since the target was introduced in 1992.

17 March 2022

The Monetary Policy Committee (MPC) still desires to bring about price stability, and so has raised interest rates from 0.50% to 0.75%. Rates are now at their post-pandemic high.

14 March 2022

At the Monetary Policy Committee’s next meeting on 17 March, we’re expecting a unanimous vote to raise interest rates from 0.50% to 0.75%. But given how uncertain the outlook for the economy and inflation is currently, we expect the MPC to signal that its next moves will be entirely dependent on the incoming data.

11 March 2022

January’s much better-than-expected 0.8% m/m jump in GDP growth means the economy has reversed all the damage done by omicron in December and then some!

08 March 2022

The result of the war and economic sanctions on Russia is that UK inflation will probably surpass 8% in April, and remain above 5% by the end of the year, while GDP growth will be just 3.5%. What’s more, those parts of the UK and global economies that have not yet come out of the pandemic’s supply shocks will soon experience further setbacks.

21 February 2022

The economy looks like it may have suffered a little from omicron in December and January, but a strong rise in the IHS/Markit Composite PMI from 55.3 in January to 60.2 in February suggests that it may be on the mend.

16 February 2022

British inflation is now at a 30-year high after another surge in goods inflation pushed January’s rate to 5.5%. Inflation hasn’t been this far above the Bank of England’s 2% target since the target was introduced in 1992.

15 February 2022

The drop in employment in December won’t be enough to prevent the Monetary Policy Committee (MPC) raising interest rates again at its next meeting in March. In fact, the rise in wage growth will fuel the MPC’s concerns about a tight labour market – keeping wage growth above the level it feels is consistent with its inflation target, which makes a rate hike in March more likely.

15 February 2022

If Russia invades Ukraine, the resulting surge in energy prices could push inflation above 8%, cause the deepest fall in households’ real disposable incomes on record, and knock 1% off GDP in 2022.

11 February 2022

The ONS’s announcement today that the UK was the fastest growing G7 member in 2021 may have left you wondering if there’s a ‘but’ coming. At the risk of spoiling the ending, it is.

04 February 2022

There is a surprisingly good relationship between a country’s results in the Six Nations rugby tournament and GDP growth in the prior year. Our forecasts for GDP growth in 2022 suggest England may romp back to a winning position next year.

03 February 2022

As expected, the Monetary Policy Committee (MPC) doubled down on its desire to show that it is serious about price stability by raising interest rates from 0.25% to 0.50% on Thursday. We may expect two further rate hikes this year, probably in both March and May, with interest rates finishing the year at 1.0%.

01 February 2022

Surging inflation is forcing consumers to borrow more and save less, suggest the latest money and credit figures.

28 January 2022

We’re expecting that the Monetary Policy Committee (MPC) will vote unanimously to raise interest rates at its next meeting on 3 February. Along with lifting interest rates from 0.25% to 0.50%, the MPC may also stop reinvesting the proceeds from maturing gilts and allow its balance sheet to shrink gradually over the next few years. Our forecast is that another rate rise in autumn will send interest rates to 0.75% by the end of the year.

24 January 2022

The tick-down in the IHS/Markit Composite PMI from 53.6 in December to 53.3 in January suggests the economic damage from omicron has been limited. Indeed, the PMI suggests growth probably stabilised in January after falling in December. We expect most of the output lost in December to be made up in February as the number of people self-isolating drops, workers return to offices and consumers get back to socialising in person.

20 January 2022

After plummeting to a two-decade low in November, the RSM UK supply chain index showed some improvement in December. However, labour shortages are still a problem, and factory and port closures in China could reignite supply chain stress.

19 January 2022

British inflation is now at a 30-year high after the surprise strength of goods inflation pushed December’s rate to 5.4%. Inflation hasn’t been this far above the Bank of England’s 2% target since the target was introduced in 1992.

18 January 2022

November’s strong labour market figures mean it’s more likely that the Monetary Policy Committee (MPC) will raise interest rates again at its next meeting on 3 February.

14 January 2022

The jump in monthly GDP growth, to 0.9% month-on-month in November, takes GDP above its pre-pandemic level. However, the emergence of the omicron variant means that it probably fell by around 0.5% m/m in December and this would leave Q4 GDP growth at 1%.

07 January 2022

The latest experimental near real-time data from the ONS suggests that the economy won’t be hit as hard by the Omicron variant as was feared.

04 January 2022

The latest money and credit figures suggest that consumer spending in November was reasonably strong, but increased consumer caution in December due to the Omicron variant probably caused spending to drop last month.

16 December 2021

The Bank of England is the first major central bank to raise interest rates after the pandemic. By an 8-1 vote on Thursday, the Monetary Policy Committee (MPC) raised the base interest rate by 0.15 percentage points to 0.25%. but maintained its bond buying target at £895bn. However, the market’s pricing in of a further three rate hikes by the end of 2022 looks premature to us.

16 December 2021

Omicron hit the services sector in early December, going by the sharp fall in the IHS/Markit Composite PMI from 57.6 to 53.2. At the forefront of the Monetary Policy Committee’s (MPC) thinking when it meets later today will be how the latest restrictions and the threat of another lockdown will affect the economy. We think the MPC will find the uncertainty enough to delay the first interest rate hike until February.

15 December 2021

The economic uncertainty created by the omicron variant may be enough to prevent the Monetary Policy Committee (MPC) from hiking interest rates on Thursday, but high inflation and a tight labour market mean it’s unlikely to delay tightening for long.

02 December 2021

RSM UK economist, Tom Pugh, predicts 2022 will see a transition towards a hypercompetitive post-pandemic economy.

01 December 2021

RSM UK's economist Tom Pugh, looks at the strength of October’s consumer borrowing, adding to evidence that households were a bit more willing to go out and spend last month. However, this could just be down to earlier Christmas shopping, so spending may weaken in December.

24 November 2021

Introducing the RSM UK Supply Chain Index: Sustained growth depends on investment. Which provides a near real-time and forward look at the elements of transportation, manufacturing, sales and labour that underscore the manufacturing and service sectors.

23 November 2021

Economic growth was stable in November, going by the tick down in the IHS/Markit Composite PMI from 57.8 in October to 57.5. At the same time, the jump in the input prices balance from 79.8 to 81.9 suggests that cost pressures continued to rise in November. The steady PMI should be enough to convince the Monetary Policy Committee (MPC) that the economy can withstand a rate hike in December.

17 November 2021

The jump in inflation in October to 4.2%, its highest rate since 2011, was probably a bit higher than the Monetary Policy Committee envisioned a few weeks ago. Combined with yesterday’s robust labour market data, we think the possibility of a rate hike in December has increased.

16 November 2021

The labour market appears to have escaped the end of the furlough scheme relatively unharmed. If the official data for October tells a similar story, and we think it will, it means the Monetary Policy Committee (MPC) is now more likely to raise interest rates in December.

11 November 2021

GDP’s strong showing in September meant it rose by 1.3% quarter-on-quarter in Q3. That’s a little below the Bank of England’s forecast for the third quarter, but keeps the Monetary Policy Committee (MPC) on track to raise rates from 0.1% to 0.25% in December.

08 November 2021

Solutions that harness the power of markets, like cap and trade systems, will play a crucial role in helping the world to decarbonise, while ensuring minimum increases in costs to businesses and consumers. Along with regulation and new carbon taxes, these systems should be at the heart of policy discussions as the world moves toward net zero.

08 November 2021

Fragile global supply chains are under further pressure from the delta variant of coronavirus. As it spreads, it results in more port closures, factory shutdowns, production halts and labour shortages.

05 November 2021

The Monetary Policy Committee has voted to leave the UK’s interest rate at its record low of 0.1%, but has also been clear that it will hike rates in December if it needs to. Tom Pugh takes a closer look at the MPC’s decision and likely next steps.

29 October 2021

The latest money and credit figures suggest that consumer spending was subdued in September. Credit growth was still well below its pre-crisis average and, given retail sales volumes fell in September, the small rise in borrowing won’t be enough ease mounting concerns that the economic recovery is running out of steam. This means that rates may not rise as far or as fast as the market expects, even if the Monetary Policy Committee (MPC) does hike them later this year.

27 October 2021

This was a bigger Budget than expected, with government spending set to rise by £150bn over the course of this parliament. But the Chancellor still chose to keep back some of the boost in revenues provided by the Office for Budget Responsibility’s (OBR) upgraded economic forecasts. This gives him some tax-cutting ammunition to use before the next general election.

27 October 2021

The upcoming rise in the national living wage will put some further upward pressure on firms’ costs over the next year and, combined with labour shortages, could feed into concerns about rapid wage growth pushing up inflation.

22 October 2021

The unexpected rise in the IHS/Markit Composite PMI from54.9 in September to 56.8 in October is welcome news and suggests that the economy has picked up momentum after what looks like a tough September.

20 October 2021

Inflation paused for breath in September, slipping to 3.1% from 3.2% in August, but this won’t last long. Surging energy prices and supply-chain disruptions will push inflation to a peak of close to 5.0% by April 2022, then it will fall just as quickly over the rest of 2022 as base effects fall out of the annual comparison.

14 October 2021

The surge in energy prices will ensure that real disposable incomes fall next year. Businesses could feel the pain more acutely than individual consumers, as they aren’t protected by a price cap and that will cause them to raise prices or even curtail production.

13 October 2021

The rebound in monthly GDP growth in August after the dismal contraction in July, leaves the economy 0.8% below its pre-pandemic level. The smaller hole in the economy increases the risk that the Monetary Policy Committee (MPC) will raise interest rates later this year. Read on to find out our outlook on the economy.

12 October 2021

The remarkable labour market recovery continued in August, which will embolden the hawks on the Monetary Policy Committee (MPC). The real question now is how the labour market handled the end of the furlough scheme in September.

11 October 2021

The growing focus on a business’s carbon emissions by customers, financiers and regulators will impact competitiveness in a much greater way than before. The middle market should prepare itself for the transition to a less carbon intensive economy.

05 October 2021

The stability in the composite activity PMI in September indicates that GDP growth was pretty flat last month, and there was more evidence that firms are starting to raise prices in response to the ongoing cost pressures.

01 October 2021

Households saved around £44bn in the second quarter of the year but these numbers can be deceiving. Read on to find out why we're concerned about the cost of living.

30 September 2021

Despite the improved pace of economic activity in Q2, we anticipate that the cumulative effect of supply chain constraints, rising prices and the lingering challenges of the pandemic will dampen that improvement in the current quarter, and weaken overall GDP growth.

29 September 2021

The latest credit data provide some encouragement that consumer spending picked up in August, but growth was still well below its pre-crisis average.

28 September 2021

Fuel shortages may be yet another factor dragging on economic growth if they continue into next week.

23 September 2021

The MPC took a more hawkish tone in its policy statement and suggested that the case for tightening policy had gotten a bit stronger recently.

22 September 2021

Rising energy prices will weigh on consumer spending and GDP growth next year. The Monetary Policy Committee (MPC) should be more concerned about the negative impact on the economic recovery from soaring energy prices than about the upward impact on headline inflation.

21 September 2021

Rising prices prompted a small rise in the inflation expectations of UK households in August, according to the latest figures. Even so, there’s little sign of the spike in medium-term expectations that would make the Monetary Policy Committee (MPC) concerned that the recent lift off in inflation is becoming entrenched.

16 September 2021

If labour shortages start to push up pay growth more widely and inflation expectations start to rise, then the MPC may act to tighten monetary policy in the first half of next year before the economy has properly recovered from the crisis.

15 September 2021

The leap in inflation to 3.2% in August is only the start of a trend that should take it beyond 4.0%. But it should drop back rapidly next year.

10 September 2021

The recovery in GDP stalled in July but should pick up in August. That said, labour and product shortages mean the risks are clearly to the downside.

03 September 2021

As a result of financial stability, the RSM UK Financial Conditions Index has moved to its highest level since 2014, reaching 1.1 standard deviations above levels of risk that are normally priced into financial assets.

24 August 2021

At first glance, the surge in headline pay growth to 8.8 per cent 3myy in June is another reason for the Bank of England to start raising interest rates in mid-2022, but headline pay has been inflated by base and compositional effects.

24 August 2021

The larger-than-expected drop in CPI inflation, from 2.5 per cent in June to 2 per cent in July is only a temporary pause before CPI inflation surges to above 4 per cent by the end of the year.