Economic voice

The Real Economy

Every week, RSM UK’s economist Tom Pugh will examine the key events on the UK’s economic calendar and outline the impact that they’ll have on middle-market businesses. He also works with RSM colleagues across the pond to see what influence changes in the US may have on the UK market, giving a comprehensive overview of the economic issues mid-market leaders need to be aware of.

Economy picked up some momentum in October

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.

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A pause on the way to 5%

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.

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Businesses start shifting higher energy costs to consumers

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.

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Rebound in growth unlikely to be sustained

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.

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Labour market tightening but biggest test yet to come

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.

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Lower carbon emissions won't mean slower economic growth

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.

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Weakening recovery suggests MPC will need to tread lightly

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.

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Excess savings – It’s a rich man’s world

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.

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Economic outlook weakening

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.

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Small rise in borrowing unlikely to boost spending

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.

Don’t panic! Fuel shortages not a threat to the economy, yet

28 September 2021

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

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MPC signals rate hikes are coming closer

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.

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MPC to focus on economy risk as energy prices surge

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.

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Inflation expectations key to interest rate outlook

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.

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Labour shortages: Where are all the workers?

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.

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Halfway up the inflation mountain

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.

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Dip in GDP growth is a blip not a trend

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.

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RSM Financial Conditions Index: Gimme shelter

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.

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Jump in pay growth won’t concern the MPC

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.

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Inflation dips in July but will still surpass 4 per cent

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.

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