2022-01-30-牛津经济研究院-United_Kingdom_Fiscal_space_increases_odds_of_some_cost_of_living_relief_5页_224kb

Summary of UK Weekly Economic Briefing (28 Jan 2022)

• COVID Restrictions and Pandemic Outlook:

  • COVID restrictions were lifted on 27 January 2022, indicating that the worst of the pandemic may be over. Higher vaccination rates and population immunity support a gradual easing, which could boost consumer sentiment and spending. However, Omicron's impact on the economy is expected to be short-lived based on PMI data.

• Inflation and Fiscal Policy:

  • Inflation is rising, leading to increased government debt interest payments, such as £8.1bn in December 2021. Despite this, public borrowing remains below the OBR's forecast, giving the Chancellor fiscal space to address cost-of-living pressures, like potential energy bill hikes. This could allow for tax cuts or subsidies to offset household spending reductions.

• Economic Indicators:

  • January's flash PMI showed a slight drop in services activity but a rebound in new orders, suggesting short-term economic resilience. Manufacturing PMI fell marginally, partly due to easing supply pressures. Overall, inflation concerns are growing, influenced by rising oil prices and higher wages, potentially prompting the MPC to raise interest rates.

• Near-Term Forecasts:

  • Consumer confidence remains cautious, with household lending potentially slowing due to inflation. The MPC is expected to decide on a rate hike in February, possibly to 0.5%, amid mixed economic signals. Upcoming releases include PMI data and consumer credit figures.

• Upcoming Events and Data:

  • Key events include the MPC policy decision on 3 February 2022, which may raise interest rates. Data releases for the week starting 1 February will cover house prices, mortgage approvals, and PMI indicators.

[End of summary]