Archive

March 12, 2024
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UK: Less Excess in the Labour Market

  • UK unemployment increased in January 2024, contrary to the consensus, but tracking the rise we forecast for Q1. However, this looks like more than just residual seasonality.
  • The underlying changes signal slightly higher unemployment. Meanwhile, vacancies are falling after their seasonal rebound, and redundancies are off their lows.
  • Wage growth was also slightly softer than expected. Resilient pay settlements should limit how much further these data slow, postponing rate cuts relative to market pricing.

By Philip Rush

March 11, 2024
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UK: CPI Reweighting Reversal Again

  • The UK ONS published the inflation basket weights that will apply for the rest of 2024. Once again, they suspiciously serve to exaggerate the short-term disinflation story.
  • Airfares now only have a slightly higher weight than in 2023 after more than doubling for January’s seasonal drop. Energy utility bills regain some weight ahead of price cuts.
  • RPI weights only change once annually, representing a different consumer and period. They raise 2024’s RPI inflation while the CPI outlook slows, expanding the CPI-RPI basis.

By Philip Rush

March 06, 2024
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UK Flogging A Dead Horse

  • The UK Budget should be the last fiscal statement before the general election. It merely sold more of the same fiscal approach, measures, and political focus to weary voters.
  • A fiscal windfall was spent on a national insurance tax cut in an ongoing effective reconfiguration from income tax. Non-dom reform steals a bad Labour policy.
  • Challenges for the next Labour government are increasingly severe but not scaring markets. Loose fiscal policy is sustaining the need for relatively high interest rates.

By Philip Rush

March 05, 2024
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UK Politics: Betting On Red

  • The 6 March budget will be highly political but looking to shore up Conservative ‘core’ support and fend off the Reform UK threat rather than appealing to the broader electorate. The embedded ‘bet’ is that an incoming Labour government will inherit the fiscal consequences.

By Alastair Newton

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