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Inflation Report Reaction

The February Inflation Report contained no big surprises – as the Bank of England revised up its inflation forecast a little and revised down its near-term growth projection slightly. This combination of changes means that the MPC now judges that the growth-inflation trade-off has worsened somewhat. The expected hawkishness of Governor Mervyn King (following yesterday’s [...]

UK Economic Update

Trade The UK recorded a trade deficit of £9.25bn in December; the largest deficit since records began way back in 1980. This was a result of a 3.5% increase in imports (from November) and only a 1.5% increase in exports. A geographical breakdown shows that the trade deficit with EU countries narrowed by £0.1bn, but [...]

A toxic cocktail

You can’t blame it all on the weather. Snow and sleet don’t fully explain poor recent UK economy performance. The UK economy suffered a shock 0.5% contraction in GDP in the fourth quarter of 2010 – the biggest drop since the second quarter of 2009. Taken at face value, this was a dreadful figure, and [...]

How long does “temporary” last?

The Bank of England’s explanations for inflation consistently overshooting are becoming repetitive, and perhaps missing the point. Once again UK inflation has surprised on the upside, leaving economists dumbfounded and searching for answers. CPI came in at 3.7% for the month of December, far higher than the 3.3% recorded in November and above the 3.4% [...]

New OBR: old message

The UK’s Office for Budget Responsibility (OBR) has ducked a fight with the Chancellor, making only minimal revisions to its growth forecasts and leaving its end-2009 output gap estimate unchanged.  But the OBR may still have to square up to the government’s fiscal stance next spring. Today’s updated projections from the OBR were an opportunity for the new body [...]

UK: budget blues but back in the black?

The UK budget reveals a reforming zeal, but Mr Osborne may find it difficult to deliver on this promises. And fiscal tightening still threatens to tip the economy back into recession.

OBR: Two questions, one answer

The OBR reckons that the true cost of the crisis will be about £35bn more than the Treasury had previously reckoned. And we reckon that Mr. Osborne might be only be made happy by a similar amount of fiscal tightening.

OBR: a bit of a bore?

The OBR has lowered the GDP growth forecasts, and have gauged the economy’s potential growth rate to be lower than previously estimated. But these predictions will need to be amended as the government’s fiscal intentions become clearer.

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