Our Views on the Markets and the Economy

Articles, investment updates and economic analysis

UK recession and the policy squeeze

The immediate economic outlook for the UK is poor. Since the 2008 Global Financial Crisis (GFC), the UK has been a low growth, low productivity and low wage economy. Now, in the wake of the Autumn Statement it appears to be becoming a high tax and high public spending economy, too.

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A litany of mistakes: modern day UK monetary policy

UK monetary policy leaves much to be desired – and we should examine the reasons why. The last week has seen both the US Federal Reserve and the Bank of England raise policy rates by 0.75%. There, however, the similarity ends.

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UK economic outlook: recession beckons as policy tightens

This column is not going to comment on the political problems engulfing the UK. You will be able to draw your own conclusions from that ever-changing environment. But political uncertainty is hanging over the UK outlook, although the risk-premium that was attached by the markets to UK assets in the wake of the mini-Budget has all but gone. Instead, here, the focus is on the economic and policy environment.

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The global backdrop: slowdown inevitable

The International Monetary Fund (IMF) has just released their global economic outlook. It makes sober reading. But it may yet prove too optimistic about the year ahead. As the chart shows, the IMF sees the world economy slowing from its strong post-pandemic rate of 6% last year, to 3.2% this year and 2.7% next year. On this measure, anything around 3% or below is very weak.

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Sterling markets and the need to establish policy credibility

The mini-Budget on Friday triggered a major sell-off in UK assets. The pound was hit hard and UK borrowing costs rose.

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Economic update

The immediate outlook for financial markets remains complex. The world economy is slowing. In turn, inflationary pressures appear to be easing, highlighted by the recent continued fall in oil and commodity prices.

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Higher interest rates may be needed for the sake of future financial stability

Where should interest rates settle? It is a key economic issue that has figured even in the Conservative Party leadership debates.

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Where are we in the UK economic cycle and what does it mean for policy and markets?

Inflation has figured prominently in our various webinars and comments since early last year. After the global recession and worries about growth in 2020, in the first few months of 2021 inflation became one of our major concerns.

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Fiscal policy has a role to play in generating real, sustainable growth

The fundamental challenge facing the economy is the need for stronger, sustainable growth. This is not a new problem and dates from the 2008 global financial crisis. In its wake, the trend rate of economic growth slowed sharply and has never recovered.

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Key issues facing the UK

There is much pessimism about the UK now. There are many reasons for this but factors that figure prominently include wariness of the Bank of England and monetary policy, pessimism towards sterling and – more recently – concerns that the tight UK labour market may not only feed current inflation but raise concerns about whether the UK’s growth potential is low.

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