March 23, 2021
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UK: labour market locked down tight

  • The UK unemployment rate declined to 5% in Jan-21, contrary to expectations for an increase. It was, at face value, caused by a drop in participation but is likely to reflect a repeat of the response-bias that unwound after the first lockdown.
  • Vacancies recovering pre-covid norms won’t prevent a belated rise in the UR. Kickstart listings have arrived, raising these vacancies beyond the pool of eligible candidates.
  • Furlough and grants for the self-employed continue to freeze the labour market in a tight setting, contributing to the strength in wages. Disappointment to the consensus in Jan-21 matched the signal driving our forecast, which has since rebounded.

March 15, 2021
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UK: savings are not for splurging

  • Households have accumulated £150bn of excess savings during Covid, fuelling bullish narratives. Overall, households are not declaring an intent to spend this windfall, though, with many experiencing severe pain and a net balance planning to cut back.
  • Savings are accumulating among those least likely to spend it. Almost half plan to hold them, with about a third investing it, fuelling the housing boom, while only 7% intend to spend the gain. We remain relatively gloomy on GDP growth, especially in H2 2021.

February 23, 2021
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UK: labour market blips in lockdown

  • UK wage growth far exceeded expectations again in Dec-20, mostly due to revisions, with the level well-above its pre-Covid trend. There was a blip in Jan-21 with median wages and vacancies falling, but the latter has rebounded so far in Feb.
  • The unemployment rate increased to 5.1% and remains on course to peak at about 7%. We still see productivity bearing the brunt of adjustment. Reports of emigration would also imply a potential GDP hit but are likely to be misreading distortions, in our view.