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October 01, 2025
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EA: Core Excess Revealed In Sep-25

  • Inflation’s break above target to 2.23%, within 1bp of our forecast, came as past energy price falls dropped out to reveal the more resilient underlying pressures.
  • Small upside surprises in large countries, like Germany and Italy, were balanced in number and contribution by larger surprises in small ones, like Greece and Estonia.
  • We expect less negative payback in October and January, preventing our profile from languishing below the target through 2026, like the consensus view does.

By Philip Rush

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

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