Archive

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 13, 2021
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UK: trade rebounds better than GDP

  • UK GDP limped up by 0.4% m-o-m in Feb-21, with services growing at half that rate in the ongoing lockdown. Few businesses have reopened even by 4 April, so March is also likely to remain fairly flat. January’s smaller fall slightly shrinks our Q1 dip call to 1.9%.
  • External trade data were more depressed in January and have recovered more swiftly, especially in exports to the EU. The underlying deficit still deteriorated on non-EU weakness, although these data may remain distorted by post-Brexit reporting changes.

March 31, 2021
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UK: corporate debt growing pains

  • Despite the deepest economic downturn in three centuries, the total number of company insolvencies has fallen to its lowest annual level since 1989.
  • Support like furlough has kept the wolf from the door, but many companies now lack the balance sheet capacity to thrive, having levered up just to survive.