Positive signs for UK economy in Q4 look to have proved short-lived
That movements in consumer credit and households’ savings in November
returned to levels more akin to pre-Covid norms offered further indication that activity was growing at a decent pace in Q4 before Omicron struck.
However, a sharp drop in December’s services PMI and a deterioration in some high-frequency indicators illustrated the consequence of surging Covid cases.
What you will learn:
- More evidence that consumer behaviour had been normalising before Omicron struck was provided by a slowdown in households’ accumulation of savings.
- Unfortunately, evidence of stronger activity in November looks to have been usurped by the consequences of the rapid spread of the Omicron Covid variant, a rise in the number of people isolating and increased consumer hesitancy.
- Moreover, the latest high-frequency indicators added to the evidence that the services sector has been hard hit by Omicron. CHAPS data on credit and debit card spending showed social spending in December averaged just under 90% of the February 2020 level.
Big shifts are underway in Russia-China trade
Data for Q3 on the volume of China's imports of crude from Russia show a drop against the June level. Rather than an indication that China's demand has peaked, this may be a sign that China is preparing for the Russian oil price cap recently agreed by G7 by shifting some of its purchases to the grey market.Find Out More
Levelling up is unlikely under the Liz Truss government
The government's levelling up ambition has probably been made more, not less, difficult by the new "Plan for Growth". Policies of lower taxes, less regulation, and a smaller state are unlikely to have much beneficial impact on long-term growth at the national level, let alone in those regions with long track records of underperformance.Find Out More