Archive

September 30, 2025
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UK: Government Leads Imbalances

  • Household saving and inflation have eroded their debt burden while corporates remain prudent. A lack of imbalances to correct starves the UK of fuel for a recession fire.
  • Persistent fiscal and current account deficits highlight where the UK’s primary risk lies. If the market regime focuses on fiscal issues, the corrective pressures could be fierce.
  • We don’t expect that correction to occur, but the Chancellor should tread carefully, while doves need not worry about a recession arising from healthier other UK sectors.

By Philip Rush

September 29, 2025
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UK: Lending Looks Stimulated

  • Lending activity is sustaining beyond the levels prevailing before the stamp duty tax hike distortion. Only housing transaction volumes are down, but by less than before.
  • New loan rates have fallen by 23bp since then, for a 110bp cumulative fall. New rates are close to the outstanding stock. Many borrowers are refinancing for similar deals.
  • Past tightening has broadly passed through, but the strength in broad money growth signals that monetary conditions are settling at a slightly stimulative setting.

By Philip Rush

September 25, 2025
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Resilience Is Reinstating

  • Falling US jobless claims and bullish GDP revisions are reinstating evidence of ongoing resilience. Underlying GDP only slowed by about 0.1pp in H1, or 15% of 2024’s average.
  • Risk management rate cuts to balance the higher costs of being wrong on the downside raise the probability that easing proves premature and swiftly ends.
  • The ECB already sees the transmission of its past cuts trending loan growth higher. It may reach pressures consistent with hikes next year, and it already clashes with easing.

By Philip Rush

September 24, 2025
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Will AI save the US Economy?

  • European policymakers and investors see Donald Trump’s economic policies harming Republican prospects in the 2026 midterms and the 2028 general election.
  • The Trump Administration is placing a good deal of faith in AI as a panacea. But the US may not have the skilled labour or the power-generating capacity to fuel an AI boom.
  • Nor is it clear whether the current Administration is preparing for the related socio-economic disruption from which the MAGA faithful would be far from immune.

By Alastair Newton

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