February 19, 2024
UK Politics: The Right Bites
- Following Reform UK’s strong performance in last week’s by-elections, the 29 February Rochdale by-election will create pressure for Rishi Sunak from within his party to shift rightwards or step down.
By Alastair Newton
February 16, 2024
UK: Retail Returns to Reality in Jan-24
- UK retail sales fully recovered in Jan-24 from their Dec-23 crash, like we forecast. However, the 3.4% surge was double the consensus expectation.
- We had branded the previous fall as a false trend break and identified it as a seasonal adjustment issue around Black Friday rather than a fundamental problem.
- Trading between October and January was the best since 2015, with NSA and SA data back in agreement. GDP will also enjoy payback from this spurious volatility.
By Philip Rush
February 15, 2024
UK Stagnation is Technically a Recession
- UK GDP disappointed as revisions meant December’s surprisingly modest decline was consistent with a much weaker Q4, falling by 0.3% q-o-q after Q3’s 0.1% contraction.
- Although GDP is technically in recession, that definition is too easy to meet for a stagnant economy. The macro regime is not breaking into a traditional recession.
- Surveys suggest that GDP is already rebounding without the dip loosening the labour market. In our view, excess demand and inflation remain inconsistent with rate cuts.
By Philip Rush
February 14, 2024
UK: Inflation Weighed Down in Jan-24
- UK CPI inflation remained at 4% in January, undershooting expectations for an increase. However, this was primarily because of weighting changes to airfares and energy.
- The median inflationary impulse was marginally above our forecast, and the RPI, which wasn’t reweighted in January, was only 0.1pp lower than we expected.
- If sustained, these weighting changes will have an upward effect on CPI inflation later this year. So, we do not see the surprise’s reason nor cumulative effect as dovish.
By Philip Rush
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