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President Cyril Ramaphosa’s State of the Nation Address (Sona) again contained some positive signs of a change in policy direction. The provision of some timelines is another source of encouragement. We have heard the right noises before, only to be disappointed come implementation time.

Inflation United Kingdom
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Research Briefing

UK inflation set to peak higher and remain stickier

uk inflation

We now see UK CPI inflation peaking at 7.5% in April and remaining higher throughout 2022. But inflation should retreat next year, and we see the odds of a scenario where the UK shifts to a higher inflation regime as low.

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Research Briefing

UK inflation set to peak higher and remain stickier

uk inflation

We now see UK CPI inflation peaking at 7.5% in April and remaining higher throughout 2022. But inflation should retreat next year, and we see the odds of a scenario where the UK shifts to a higher inflation regime as low.

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Eurozone | Energy price spike means “higher for longer” inflation
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Research Briefing

Eurozone: Energy price spike means “higher for longer” inflation

Eurozone | Energy price spike means “higher for longer” inflation
Persistently high energy prices will cause eurozone inflation to be higher for longer than we previously anticipated. Our new forecast envisions inflation averaging 3.9% in 2022, compared to our earlier 2.5% estimate. This would mark the highest full-year inflation rate in the eurozone’s history.

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Research Briefing

Eurozone: Energy price spike means “higher for longer” inflation

Eurozone | Energy price spike means “higher for longer” inflation
Persistently high energy prices will cause eurozone inflation to be higher for longer than we previously anticipated. Our new forecast envisions inflation averaging 3.9% in 2022, compared to our earlier 2.5% estimate. This would mark the highest full-year inflation rate in the eurozone’s history.

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UK Data confirms modest hit from Omicron
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Research Briefing | Feb 14, 2022

Data confirms modest hit from Omicron in the UK

UK Data confirms modest hit from Omicron
The net economic effect of Omicron – a blow to social consumption but a boost to health output from testing and vaccinations – resulted in only a modest 0.2% fall in GDP in December.

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Research Briefing | Feb 14, 2022

Data confirms modest hit from Omicron in the UK

UK Data confirms modest hit from Omicron
The net economic effect of Omicron – a blow to social consumption but a boost to health output from testing and vaccinations – resulted in only a modest 0.2% fall in GDP in December.

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Eurozone: When forward guidance blurs guidance
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Research Briefing

Eurozone: When forward guidance blurs guidance

Weekly economic briefing Eurozone 11 February
In a week with few economic data releases, the latest ECB communications turned the week tumultuous. It appears that worries about inflation have risen sufficiently for the ECB to accelerate the path of tightening. So, in addition to a faster tapering process that could see asset purchases end in Q3, we now also expect the ECB to hike the deposit rate in December and again in March next year, ending the period of negative interest rates.

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Research Briefing

Eurozone: When forward guidance blurs guidance

Weekly economic briefing Eurozone 11 February
In a week with few economic data releases, the latest ECB communications turned the week tumultuous. It appears that worries about inflation have risen sufficiently for the ECB to accelerate the path of tightening. So, in addition to a faster tapering process that could see asset purchases end in Q3, we now also expect the ECB to hike the deposit rate in December and again in March next year, ending the period of negative interest rates.

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Midwest and South in the vanguard of spiking US inflation
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Research Briefing | Feb 11, 2022

Midwest and South in the vanguard of spiking US inflation

Midwest and South in the vanguard of spiking US inflationThe Midwest and South are leading the surge in inflation nationally. While US CPI inflation averaged 6.7% y/y in Q4 2021, regional prices were up 7.2% y/y and 7.1% y/y in the Midwest and the South, respectively, and a slightly cooler 6.5% y/y in the West and tamer 5.8% y/y in the Northeast.

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Research Briefing | Feb 11, 2022

Midwest and South in the vanguard of spiking US inflation

Midwest and South in the vanguard of spiking US inflationThe Midwest and South are leading the surge in inflation nationally. While US CPI inflation averaged 6.7% y/y in Q4 2021, regional prices were up 7.2% y/y and 7.1% y/y in the Midwest and the South, respectively, and a slightly cooler 6.5% y/y in the West and tamer 5.8% y/y in the Northeast.

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Africa Forecasting Service

You may be interested in African and Middle Eastern Cities Forecasts Comprehensive data and forecasts for major cities in Africa and the Middle East. Find Out More → Africa Forecasting Service Comprehensive analysis of immediate and long-term economic and political prospects to inform investment strategies, expansion and African operations through forecasts and commentary by country, … Read more

Bringing together data, forecasts and analysis, our service offers insights into how shifts in market fundamentals could shape the commodities outlook.

Key Trends for Canada in 2022

You may be interested in Canadian Province and Metro Service Data and forecasts for Canadian provinces and metropolitan areas. Find Out More → Canada Provincial Territorial Model A rigorous and comprehensive framework to develop forecasts, scenarios and impact analysis at the national, provincial and territorial levels. Find Out More → Canada Macro Service Comprehensive coverage … Read more

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Research Briefing | Feb 4, 2022

ECB’s hawkish shift paves ground for a possible rate hike in the eurozone

Ipad Frame - Eurozone-ECBs-hawkish-shift-paves-ground-for-a-possible-rate-hike

The February ECB meeting marked the beginning of a clear hawkish shift in the ECB’s policy outlook. Although the policy stance was left unchanged, the tone of president Lagarde’s press conference showed a heightened level of concern with risks to the inflation outlook now seen as titled to the upside.

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Research Briefing | Feb 4, 2022

ECB’s hawkish shift paves ground for a possible rate hike in the eurozone

Ipad Frame - Eurozone-ECBs-hawkish-shift-paves-ground-for-a-possible-rate-hike

The February ECB meeting marked the beginning of a clear hawkish shift in the ECB’s policy outlook. Although the policy stance was left unchanged, the tone of president Lagarde’s press conference showed a heightened level of concern with risks to the inflation outlook now seen as titled to the upside.

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Research Briefing

Hawkish MPC signals aggressive pace of rate hikes in the UK

United Kingdom | Hawkish MPC signals aggressive pace of rate hikes

Alongside its decision to raise rates by 25bps to 0.5%, the MPC today sent an unmistakeably hawkish message, and we now expect further 25bp hikes in March and May, followed by another 25bp increase in H2. But in our view, the MPC’s aggressive approach is not consistent with the data nor with the sizeable downside risks to growth.

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Research Briefing

Hawkish MPC signals aggressive pace of rate hikes in the UK

United Kingdom | Hawkish MPC signals aggressive pace of rate hikes

Alongside its decision to raise rates by 25bps to 0.5%, the MPC today sent an unmistakeably hawkish message, and we now expect further 25bp hikes in March and May, followed by another 25bp increase in H2. But in our view, the MPC’s aggressive approach is not consistent with the data nor with the sizeable downside risks to growth.

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Turkey: Why the lira scheme may do more harm than good
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Research Briefing

Why the Turkish lira scheme may do more harm than good

Turkey | Why the lira scheme may do more harm than good

Turkey’s unpredictable macro policies could leave the treasury with a sizeable bill stemming from FX-protected lira deposits. The baseline for public finances, however, remains benign for now; they compare favourably with most emerging markets (EMs).

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Research Briefing

Why the Turkish lira scheme may do more harm than good

Turkey | Why the lira scheme may do more harm than good

Turkey’s unpredictable macro policies could leave the treasury with a sizeable bill stemming from FX-protected lira deposits. The baseline for public finances, however, remains benign for now; they compare favourably with most emerging markets (EMs).

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Blog|2 February 2022

The cost of achieving net zero housing will add to inequalities in the UK

Tim Lyne
Tim Lyne
Associate Director, Cities & Regions
The cost of achieving net zero housing will add to inequalities in the UK

The UK’s housing market suffers from yawning regional inequalities over both the condition and price of homes—and the challenge posed by the need to reduce greenhouse gas emissions from domestic property threatens to further accentuate those divisions.

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Research Briefing | Feb 1, 2022

Eurozone banks dodge Covid bullet, but vulnerabilities remain

Ipad Frame - Eurozone | Banks dodge Covid bullet, but vulnerabilities remain

The banking sector has proved resilient during the pandemic, and eurozone banks will continue to play a significant role supporting the near-term recovery. That said, a sustained virtuous cycle between banks and the economy looks unlikely in our view.

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Research Briefing | Feb 1, 2022

Eurozone banks dodge Covid bullet, but vulnerabilities remain

Ipad Frame - Eurozone | Banks dodge Covid bullet, but vulnerabilities remain

The banking sector has proved resilient during the pandemic, and eurozone banks will continue to play a significant role supporting the near-term recovery. That said, a sustained virtuous cycle between banks and the economy looks unlikely in our view.

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Research Briefing | Feb 1, 2022

Five crucial questions on the US labor market

Five crucial questions on the labor market

Following a swift recovery, the US labor market is entering a crucial phase and the answers to five key questions will have a major bearing on wage growth, inflation, and the health of the recovery.

After steep job losses early in the pandemic, the rebound has been unusually rapid – nearly 19 million jobs, or 84% of the 22 million jobs lost, have been recouped and the unemployment rate is now back below 4%. But labor force participation has been slow to recover, leading to a severe labor shortage that is extending into 2022.

This year, a labor supply rebound should act as a relief valve for excessively high wage pressures. It should also ensure the ‘income baton’ is passed from fiscal stimulus to labor market-driven income growth – a keystone of our consumer and broader economic outlook.

The recovery of the labor market will continue in fits and starts. We expect robust business activity and higher labor force participation will help close the 3.6 million jobs shortfall in H2 2022. We also anticipate the unemployment rate falling toward 3.5% by year-end and the participation rate rebounding to 62.5%.

Given the murky path of the pandemic and the fact that some labor force decisions made during the pandemic could take longer to unwind, a slower rebound in labor force participation is a key risk. Not only could this affect the labor market; it would also impact inflation and the broader economic outlook.

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Research Briefing | Feb 1, 2022

Five crucial questions on the US labor market

Five crucial questions on the labor market

Following a swift recovery, the US labor market is entering a crucial phase and the answers to five key questions will have a major bearing on wage growth, inflation, and the health of the recovery.

After steep job losses early in the pandemic, the rebound has been unusually rapid – nearly 19 million jobs, or 84% of the 22 million jobs lost, have been recouped and the unemployment rate is now back below 4%. But labor force participation has been slow to recover, leading to a severe labor shortage that is extending into 2022.

This year, a labor supply rebound should act as a relief valve for excessively high wage pressures. It should also ensure the ‘income baton’ is passed from fiscal stimulus to labor market-driven income growth – a keystone of our consumer and broader economic outlook.

The recovery of the labor market will continue in fits and starts. We expect robust business activity and higher labor force participation will help close the 3.6 million jobs shortfall in H2 2022. We also anticipate the unemployment rate falling toward 3.5% by year-end and the participation rate rebounding to 62.5%.

Given the murky path of the pandemic and the fact that some labor force decisions made during the pandemic could take longer to unwind, a slower rebound in labor force participation is a key risk. Not only could this affect the labor market; it would also impact inflation and the broader economic outlook.

Read more

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Research Briefing | Feb 1, 2022

Costa’s election win offers hope for political stability in Portugal

Portugal | Costa’s election win offers hope for political stability

Yesterday’s unexpected majority win for the Socialist Party paves the way for greater political stability in Portugal. This will simplify the government formation process, speed up approval of the 2022 budget, and facilitate Portugal’s implementation of its recovery and resilience plan and the unlocking of EU funds.

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Research Briefing | Feb 1, 2022

Costa’s election win offers hope for political stability in Portugal

Portugal | Costa’s election win offers hope for political stability

Yesterday’s unexpected majority win for the Socialist Party paves the way for greater political stability in Portugal. This will simplify the government formation process, speed up approval of the 2022 budget, and facilitate Portugal’s implementation of its recovery and resilience plan and the unlocking of EU funds.

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Canary Wharf London
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Research Briefing | Jan 31, 2022

A new era of weaker labour supply growth in the UK

United Kingdom | A new era of weaker labour supply growth

After a decade of consistently strong growth, UK labour supply has slumped since the onset of the pandemic and we expect only a partial recovery this year. The drop in labour supply is due to a combination of cyclical and structural factors, primarily virtually zero net inward migration due to the pandemic and a hiatus in the rise in the state pension age.

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Research Briefing | Jan 31, 2022

A new era of weaker labour supply growth in the UK

United Kingdom | A new era of weaker labour supply growth

After a decade of consistently strong growth, UK labour supply has slumped since the onset of the pandemic and we expect only a partial recovery this year. The drop in labour supply is due to a combination of cyclical and structural factors, primarily virtually zero net inward migration due to the pandemic and a hiatus in the rise in the state pension age.

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ECB Watch
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Research Briefing | Jan 31, 2022

ECB Watch – inflation risks will dominate ECB meeting

Eurozone | ECB Watch – inflation risks will dominate ECB meeting

Inflation prospects will again dominate the upcoming ECB meeting. We do not expect any clear policy signals or decisions given that the council made major changes only in December. But the press conference may offer early clues on whether a gradual shift to a more hawkish stance is underway in the council.

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Research Briefing | Jan 31, 2022

ECB Watch – inflation risks will dominate ECB meeting

Eurozone | ECB Watch – inflation risks will dominate ECB meeting

Inflation prospects will again dominate the upcoming ECB meeting. We do not expect any clear policy signals or decisions given that the council made major changes only in December. But the press conference may offer early clues on whether a gradual shift to a more hawkish stance is underway in the council.

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Middle eastern cities the long term outlook
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Research Briefing | Jan 31, 2022

Middle Eastern Cities: The long-term outlook

Ipad Frame - Middle Eastern Cities-The long-term outlook

In 2021, there were 16 Urban Economic Powerhouses in the world (cities with GDP greater than $500bn), but none were located in the Middle East. By 2040, another 47 Powerhouses will have emerged, and three of these will have risen in the Middle East—Tehran, Dammam, and Tel Aviv.

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Research Briefing | Jan 31, 2022

Middle Eastern Cities: The long-term outlook

Ipad Frame - Middle Eastern Cities-The long-term outlook

In 2021, there were 16 Urban Economic Powerhouses in the world (cities with GDP greater than $500bn), but none were located in the Middle East. By 2040, another 47 Powerhouses will have emerged, and three of these will have risen in the Middle East—Tehran, Dammam, and Tel Aviv.

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Research Briefing | Jan 31, 2022

Fiscal space increases odds of some cost-of-living relief for the UK

United Kingdom | Fiscal space increases odds of some cost of living relief

The lifting of Covid restrictions on January 27 adds to hopes that the worst of the pandemic is in the past and should boost consumer sentiment. But these positives face off against rising inflation and growing cost of living pressures.

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Research Briefing | Jan 31, 2022

Fiscal space increases odds of some cost-of-living relief for the UK

United Kingdom | Fiscal space increases odds of some cost of living relief

The lifting of Covid restrictions on January 27 adds to hopes that the worst of the pandemic is in the past and should boost consumer sentiment. But these positives face off against rising inflation and growing cost of living pressures.

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