Archive

July 29, 2025
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UK: Loans Secured Despite Tax Hike

  • Credit extended its rebound far beyond expectations in June. Reformed stamp duty raises costs and housing tenure, but it hasn’t broken the housing or mortgage markets.
  • Demand for loans looks more resilient than banks expected amid easing monetary conditions. Refinancing may not have much effect on cash flow anymore.
  • Higher transaction costs probably won’t break expectations into a downwards spiral, but are now widely cited as a major hurdle, contributing to slower UK activity growth.

By Philip Rush

July 23, 2025
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UK Structurally Unemployed

  • Higher employment taxes can entirely explain the fall in payrolls as the tax wedge hits its highest since 1987, raising our structural unemployment rate estimate by 0.48pp.
  • That could understate the structural shift amid a substantial drop in the threshold, rise in the minimum wage (jobs ban) and benefit rates. Some will go ‘inactive’ on disability.
  • The unemployment rate must rise more than its natural rate to deliver disinflationary pressure sustainably. Our structural estimates suggest it won’t break excess inflation.

By Philip Rush

July 17, 2025
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UK Jobs Data And The Muddled MPC

  • UK payroll revisions removed most of May’s weakness, while wage and price inflation is too fast, yet the BoE probably won’t back down from an August cut as the UR rises.
  • Fewer payroll inflows explain its downtrend, with <24yo suffering sustained pain, but the 25-64yo endure the taxation hit, structurally raising unemployment by ~0.5pp.
  • Wage growth isn’t showing signs of new disinflationary demand pressures, so we expect excessive underlying wage and price trends to persist, not helped by an August BoE cut.

By Philip Rush

July 14, 2025
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Tuning Tariff Impact Estimates

  • President Trump’s tariff policy seemingly follows a random walk with a drift towards deals. Path dependency raises risks and uncertainty around his volatile whims.
  • Corporate avoidance measures have spared their customers from most of the pain, but Vietnam’s deal as a template could belatedly bring more of the pain to bear.
  • We assume most countries stay at 10%. The impact of others rising to 20% may be smaller than the anti-avoidance hit, with the total now worth less than 0.4% to UK GDP.

By Philip Rush

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