United Kingdom key themes 2022: A tougher phase for the recovery

After enduring one of the deepest downturns in 2020, the UK has enjoyed one of the strongest rebounds in 2021. The ‘easy’ gains from reopening are behind us, and unprecedented policy support is being withdrawn, so the recovery is now entering a tougher phase. But provided the Omicron Covid variant doesn’t result in renewed restrictions, we’re sticking to our upbeat view of the UK’s prospects for 2022 based on four key themes shaping the outlook.

What you will learn:

• A lack of spending opportunities has resulted in UK households accumulating excess savings worth 10% of income during the pandemic.
• Another large rise in the energy price cap and the restoration of the VAT rate for the hospitality sector to 20% are likely to push CPI inflation above 5% in April 2022.
• Market pricing implies that Bank Rate will be 1% at the end of 2022. This looks far too aggressive.