UK underlying inflation pressures remain strong. A thread running through the measures of 'underlying' inflation pressure the MPC has mentioned. First, 'underlying' services inflation; ex. gov. set and volatile prices, air fares and holidays. No slowdown since H2 2025.

Show me a chart that illustrates the UK's persistent inflation problem...

Who knew? UK payrolls get revised Every month the focus is on a first estimate, like August's 26K monthly drop. But revisions move payrolls closer to business surveys that show stabilisation. It's hardly strong growth, but it's better and enough to keep the unemployment rate stable.

Wanna bet that UK payrolls are as weak as currently published?

Lord O'Neil commented in the FT today that the UK's bordering on strong growth deserves more comment... Well, hello, Mr. O'Neil! Grab yourself a Pantheon trial. We're talking about it. A lot. #ukeconomy

You and me both Megan.

UK labour market looks to be finding its feet, with REC survey showing permanent placements balance at 4-year high in Sep., private vacancies rising for the first time in 2 years, staff availability increasing at the slowest pace in three. Hardly booming—but no longer weakening.

UK disinflation was incomplete before the latest energy shock. Progress had stalled on several measures, and July and August brought, necessarily very tentative as it's only two months' data, warning signs. www.linkedin.com/pulse/uk-inf...

UK inflation: from acute to chronic… with a tentative warning

Has UK inflation really been heading comfortably back to target? The bulk of the Bank of England’s Monetary Policy Committee has been arguing in the affirmative for some time—but for the war we'd be s...

linkedin.com

Oh boy. It’s too politically hard to tighten now so best to create months of uncertainty and end up delaying yet more tightening to an election year that already has a lot of tightening… sure thing. www.ft.com/content/9df5... Healey set to delay difficult choices with ‘breathing space’ UK Budget

Healey set to delay difficult choices with ‘breathing space’ UK Budget

Chancellor expected to focus statement on targeted help for households and businesses rather than tax rises on the scale of recent budgets

ft.com

Thorough and even-handed post from @robwoodecon.bsky.social on why, in his view, the UK's inflation problem is chronic rather than acute www.linkedin.com/pulse/uk-inf...

UK inflation: from acute to chronic… with a tentative warning

Has UK inflation really been heading comfortably back to target? The bulk of the Bank of England’s Monetary Policy Committee has been arguing in the affirmative for some time—but for the war we'd be s...

linkedin.com

UK inflation expectations are not anchored Your regular reminder, from YouGov/Citi's September household inflation expectations survey published this morning, that UK inflation expectations are not anchored.

Younger people have definitely bought into the Burnham bounce. For under-50s, and especially the under-30s, confidence is booming. Sadly, the rubber soon hits the road, with the upcoming Budget hiking taxes rather than spraying money around.

Andy Burnham: "It's not the case we were surprised when we came in... Because of the situation in the Middle East, the position... changed over the time I've been in" Nonsense. Headroom had fallen to £15.1B on July 20, and slipped to £12.7B on Sept 22. Most of deterioration was already there.

"...maintaining March's buffer is unnecessary at a time when borrowing and energy costs have risen sharply." Bonkers. We could very easily be back two weeks after the Budget with the new headroom gone. How would that demonstrate credibility of future consolidation? www.ft.com/content/5dec...

Treasury open to smaller fiscal headroom to reduce UK tax hikes

Investors signal Budget buffer could fall from the £23.6bn forecast to around £14bn without spooking gilt market

ft.com

Let's just say that UK payrolls for April published today are quite unlikely to be giving an accurate steer on April job growth.

In his response @robwoodecon.bsky.social emphasises the importance of the risks from US tariffs, pressure on the Fed and how all this will play out for UK fiscal policy.

Discussion has focused on risks to UK monetary policy. @robwoodecon.bsky.social makes the point that any windfall from lower US rates spilling over to larger UK fiscal headroom is likely to spent given the unpopularity of the government.

At our event earlier today, @robwoodecon.bsky.social discussed how political pressures meant that any fiscal windfall from lower US policy rates would likely lead to more spending by the Chancellor.

The fiscal rules add a lot of noise and little else, it's time to drop them and focus on the actions needed to deliver sustainable fiscal policy. www.linkedin.com/pulse/ballot...

Ballot box or market discipline, rather than rules, will constrain politicians

The House of Lords Economic Affairs Committee’s enquiry into the UK’s fiscal framework took evidence from a range of economists last week, prompting a bunch of commentary. Here is my two-penny-worth.

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UK inflation expectations are modestly deanchored. 5-year ahead expectations higher than when inflation was in double digits and the survey is biased vs. history down by a method change in 2020. Paging MPC.

You've got to the love the UK CBI retailing survey. Volatile much? But for what it's worth, sales for the time of the year reach the strongest in 14 months in July.

UK payrolls driven by NICS rather than weak demand. Sectors with high share of part-time workers—whose employment costs rise most after NICS hike—and self-employment—opportunity to cut tax liability by switching from employee status—see payrolls most. Latter means payrolls exaggerates job falls.

UK political views increasingly seem to be driving responses to consumer sentiment—a phenomenon seen for some surveys in the US too—making them a less reliable leading indicator.

Which do you believe? Payrolls that just got massively revised, or the other two series which are also revision prone and in the case of the LFS not firing on all cylinders yet. Jobs falling or rising solidly?....What the MPC would give for accurate data.

Surprise, surprise, UK payrolls were revised up bang in line with their typical pattern. The question is, why would anyone believe the dodgy first estimates from this series showing tanking jobs? With a typical revision to June data, job falls are easing now.

Shall we call it the estate agents' PMI?

Here's the thing about the UK PMI. The higher uncertainty goes the worse an indicator of growth the PMI becomes. Policy uncertainty was nearly 5 standard deviations above normal in April/May, so the PMI is giving a far too pessimistic steer.

Cautious consumers you say? Retail sales growing the fastest in 3 years and now liquid asset accumulation dropping sharply. For my money the ONS saving rate data are wrong—they often revise it down sharply. Consumers will keep GDP growth ticking along.

The MPC will struggle to cut twice more this year after inflation surged to 3.5%, well above consensus of 3.3% but close to our call of 3.6%. Administered prices drove the surge, and there was a small Easter boost, but underlying pressures are stubborn. 'Skips' are likely now.

It's difficult to reconcile the data around the cautious consumer - not least another pick up in the savings ratio - with the strength in the retail sales. There are probably good reasons to put more weight on either set of data, but the discrepancy does muddy the true picture of consumer activity