August 12, 2022
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UK: Holidays Reduce Output in Jun-22

  • UK GDP contracted by 0.6% m-o-m in June after a downwardly revised 0.4% growth in May, which appears to confirm the distortions from the Diamond Jubilee holidays.
  • Some positive payback should occur in July as the output level normalises with the number of working days. However, GDP looks to be trending barely better than flat.
  • Aggressively increased interest rates will compound inflation’s squeeze on the cycle, raising the risk of a needless recession when pressures are burning out anyway.

By Philip Rush

August 04, 2022
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BoE: Market Tail Wags Policy Dog

  • The BoE hiked by 50bps to 1.75%, in line with market and consensus expectations, but contrary to our view that a lack of increased second round effects would mean 25bps.
  • A reassessment of existing pressures proved more important than the downside news and state-dependent guidance that was needlessly issued and broken.
  • We now ignore retained guidance about the reaction function and focus on the BoE’s 2yr inflation forecast. GBP pressure will probably underly another 50bp if it occurs.

By Philip Rush

July 22, 2022
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UK: Sales Down, Down, Deeper and Down

  • The British consumer continued suffering from painfully high inflation in June, with no significant real growth since Oct-21 creating an annual decline near 6%.
  • Food sales were relatively high in June but should probably be read relative to the deep drop in May amid bank holiday changes. April’s similar rise was revised away.
  • Non-retail consumption is also being squeezed. New car sales are trending down at near a 20% annual pace. Consumers are being forced to drop discretionary purchases.

By Philip Rush