Insights
Insights into the current political and economic challenges facing businesses today
BoE holds fire - But a December rate cut now looks imminent
Martin Beck, Chief Economist | Economic Consulting and Analysis
A narrow 5-4 vote to hold rates in November’s MPC meeting shows how close the Bank of England is to easing. With fiscal tightening looming and inflation fading faster than expected, we think a December rate cut is now odds-on.
The BoE will probably skip a rate cut this week, but a December move is odds on
Martin Beck, Chief Economist | Economic Consulting and Analysis
We expect the Bank of England to hold interest rates narrowly when it announces its decision on Thursday 6 November, preferring to wait for greater clarity from the Budget later this month. But with inflation undershooting forecasts and fiscal tightening ahead, a precautionary rate cut in December is highly likely.
UK Week in Review - 31st October
Martin Beck, Chief Economist | Economic Consulting and Analysis
The UK economy - and housing market in particular - continue to defy the downbeat consensus, but that strength offers little protection from looming tax rises. With the OBR’s forecasts now on her desk, we think the Chancellor will raise income tax to plug a sizeable fiscal gap. The Budget may impose a deadweight on the economy, but it could also pave the way for earlier rate cuts if the Bank of England moves to offset the drag.
UK housing market revival resumes as mortgage costs ease
Martin Beck, Chief Economist | Economic Consulting and Analysis
UK mortgage approvals rose to their highest in nine months in September and mortgage lending jumped, signalling renewed momentum in the housing market despite Budget uncertainty. Falling mortgage rates and looser credit conditions are helping to stabilise activity, though looming fiscal risks suggest the recovery remains fragile.
UK Week in Review - 24th October
Martin Beck, Chief Economist | Economic Consulting and Analysis
UK economic data offered some welcome relief this week. Inflation looks to have peaked at a lower level than expected, borrowing costs have eased, and consumer spending remains resilient. But with fiscal headroom still tight, the Chancellor faces a difficult Budget balancing act next month.
Plaid Cymru win Caerphilly, leaving questions for Labour
Solomon Fitzpatrick, Senior Consultant | Public Affairs and Corporate Communications
Plaid Cymru have won the Caerphilly by-election, despite Reform having led the polls in the lead up. The result marks the first time Labour have lost the seat in either the Senedd or Westminster, having held the Westminster seat for more than a century. Solomon Fitzpatrick provides insight on what this means for the current Labour government, and next May’s Senedd elections.
UK retail sales maintain momentum, but recovery still fragile
Martin Beck, Chief Economist | Economic Consulting and Analysis
UK retail sales continued to recover in September, extending a four-month run of growth. But while the data point to a recovering consumer sector, the broader picture remains one of slow progress. Volumes are still below pre-pandemic levels, and a shift in household spending towards services and experiences continues to limit the scope for a full retail revival.
Is UK inflation past its worst?
Martin Beck, Chief Economist | Economic Consulting and Analysis
On the face of it, CPI inflation at 3.8% in September suggests the UK’s inflation problem persists. But the latest reading came in below consensus and Bank of England expectations, while some measures of underlying price pressures eased. A combination of base effects, lower oil and petrol prices and the drag from tighter fiscal policy mean inflation should now start to head down.
Little relief for the Chancellor as borrowing remains stubbornly high
Martin Beck, Chief Economist | Economic Consulting and Analysis
September’s government borrowing figures were in line with the OBR’s forecast and the deficit in the year to date was revised down, but the good news may stop there. The government’s headroom against its fiscal rules has almost certainly disappeared, leaving tough tax and spending choices ahead in November’s Budget.
Week in Review: Signs of stability amid fiscal clouds
Martin Beck, Chief Economist | Economic Consulting and Analysis
This week saw signs of stabilisation emerging as jobs and GDP edged up and pay growth slowed, pointing to an easing in inflationary pressures. But with tax rises looming in the budget, confidence remains fragile and the sustainability of the expansion uncertain.
UK economy returns to growth, but challenges remain
Martin Beck, Chief Economist | Economic Consulting and Analysis
WPI’s Chief Economist, Martin Beck, discusses August's modest 0.1% rise in GDP, an improvement on the previous month, but not a breakthrough. Restrictive interest rates, cost of living pressures, and looming tax rises continue to weigh on confidence but strong household finances and a stabilising labour market offer resilience.