Archive

February 13, 2026
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HEW: Assuming Success

  • Assumptions consistent with our hopes are alluring, but not always realistic. They can lead policymakers to learn the wrong lessons for politics and monetary conditions.
  • Recent election victories don’t mean a new soft-left UK leader will achieve the same. Current resilience need not break to target-consistent levels, nor create room for cuts.
  • Next week is packed with some of the most important UK releases coming before the BoE’s March decision, including unemployment and inflation’s likely January drop to 3%.

By Philip Rush

February 12, 2026
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UK GDP Softly Turns In Q4

  • Half of last month’s upside GDP growth surprise was revised away with the December data, tempering Q4 growth back to our 0.1% q-o-q forecast while disappointing others.
  • An encouraging mix skewed to services output meant the underlying performance still trended up during Q4. We now track 0.4% for Q1, aided by residual seasonality.
  • Revisions to December, or a belated catch-up to trend, could make this even stronger. It is the flip side of soft H2 performances, and the dovish BoE is focused on other things.

By Philip Rush

February 11, 2026
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UK: Unsustainable Wage Growth

  • Wage growth of 3.25% is unlikely to be consistent with achieving the 2% inflation target, contrary to the BoE’s assessment that relied on consistently dovish-biased assumptions.
  • Stagnant productivity and a recovery in profit margins are problems that should inform any coincident assessment. But the Bank is relying on the world to bail out UK excesses.
  • The Euro area and China are not structurally exporting disinflation anymore, and the latter is not politically tolerable. The biased BoE seems set to keep missing its target.

By Philip Rush

February 09, 2026
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UK Electoral Hopes Rise In Asian Victories

  • Landslide victories for recently appointed Prime Ministers calling snap elections in Japan and Thailand offer hope to Labour MPs hoping Keir Starmer stands aside soon.
  • Peter Mandelson’s conduct is damned in the Court of Public Opinion, including evidence that he was unfaithful to his political colleagues and husband. Starmer can’t escape it.
  • Leadership challengers aren’t ready yet, so Starmer remains likely to limp on longer. But change will bring fiscal easing that the dovish BoE fails to anticipate adequately.

By Philip Rush

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