April 20, 2021
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UK: mid-winter freeze in employment

  • The UK unemployment rate declined again to 4.9% in Feb-21 as the downwards bias from respondents during lockdowns extended. This effect remains likely to unwind after re-opening, just like it did after the initial lockdown.
  • Furlough continues to freeze the labour market in a state that is inconsistent with either prevailing output or the behavioural trends of the new normal. The tight labour is squeezing firms to raise wages and frustrating rebalancing forces by design.

April 16, 2021
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EA: inflation rising with a soggy bottom

  • EA HICP inflation for Mar-21 was confirmed at 1.3% y-o-y while the ex-tobacco index was marginally weaker than expected at 106.09 (Heteronomics: 106.12) for 1.26% y-o-y. Clothing was softer with transport and housing offsetting, mostly owing to Italy changes.
  • The headline rate is set to rise further from base effects over the next two months before slumping in July. A likely rise above target in the Autumn should be fleeting as underlying inflation provides a soggy bottom rather than a firm foundation.

April 14, 2021
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EU: Waiting in the wings for Hamilton

  • The current Covid19 crisis is an opportunity for the EU to force the door open a little further towards sharing debt - the Hamiltonian moment.
  • However, the attitude of any new German administration to further fiscal entanglement with southern Europe is unclear. We believe the doom loop has yet to be extinguished.