Cost-of-living crisis in numbers

Cost-of-living crisis in numbers

In the 1970s and 1980s high rates of inflation threatened economies and social stability across the West. Since then, independent central banks have helped tame inflation, aided by rapid globalisation that has provided western consumers with more and cheaper goods. For most of the last 25 years inflation rates have bobbed around the 2.0% mark. Politicians and voters haven’t needed to worry much about inflation.

With prices up by around the 9.0% mark over the last year in the US and Europe inflation has moved centre stage again. The cost of living poses a major challenge for the Democrats in November’s US mid-term elections and the issue has dominated the Conservative leadership election in the UK.

The data are worrying. While in the UK average total earnings rose by a hefty 6.2% in the three months to May on a year earlier, CPI inflation rose by 8.3%. Even with earnings growth running at unusually high levels, real earnings, after inflation, have fallen by 2.1% in the last year.

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Posted on 01/08/2022

UK CFOs braced for recession

Deloitte-uk-cfos-braced-for-recession

The latest Deloitte survey of Chief Financial Officers released last week provides a snapshot of the thinking and strategies of UK CFOs. The full report is available at:

https://www2.deloitte.com/uk/en/pages/finance/articles/deloitte-cfo-survey.html

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Posted on 25/07/2022

Gone missing - half a million workers

Gone missing - half a million workers

The UK labour market has come through the pandemic in surprisingly good shape. Predictions of mass job losses proved wide of the mark. The end of the furlough scheme, which was widely expected to result in major job losses, was instead followed by a surge in job vacancies and lower levels of unemployment.

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Posted on 18/07/2022

A recession radar

A recession radar

The Bank of England expects inflation to hit the 11% mark later this year. When inflation gets to these sort of levels things usually do not end well. Growth is slowing across the industrialised world. The question now is about the severity and magnitude of the downturn and whether we can avoid a recession.

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Posted on 11/07/2022

Sterling’s slide

Sterling’s slide

The pound has been losing ground in international currency markets. So far this year it has lost 5% of its value on a trade-weighted basis, mainly because of a 10% fall against the US dollar.

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Posted on 04/07/2022

Chinese growth prospects

Deloitte-uk-chinese-growth-prospects

China’s growth rate isn’t what it was, but in a world of slowing growth China still looks like an outperformer.

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Posted on 27/06/2022

Central banks hit the brakes, recession risks rise

Central banks hit the brakes  recession risks rise

The odds of recession have been rising for months. Last week will be remembered as the week in which they lurched sharply higher. With US inflation hitting a 40-year peak of 8.6% and euro area and UK inflation at similar or higher levels, markets fear that central banks will have to push economies into recession to tame inflation.

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Posted on 20/06/2022

Roaring twenties, spluttering twenties

Roaring Twenties  Spluttering Twenties

A year is a long time in economics. Last summer there was much talk of how the end of the pandemic could usher in a period of rapid, technology-driven growth, much as happened in the 1920s. Such talk has faded in the face of soaring inflation and faltering growth. Instead of roaring growth in the 2020s, global activity is spluttering, with the OECD and the World Bank warning last week of the growing risks of a recession.

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Posted on 13/06/2022

Queen’s Jubilee quiz

Deloitte-uk-queens-jubilee-quiz

For the first time in more than 12 years the Monday Briefing is appearing early, on a Thursday. This break with precedent has been triggered by a still greater landmark, the 70th anniversary of the Queen’s accession to the throne. To mark the occasion, and to provide a possible diversion over the Bank Holiday break, the Economics team offers a Platinum Jubilee quiz. There are 14 questions, one to mark each prime minister who has served during the Queen’s long reign. For the purpose of simplicity most numbers are rounded to the nearest whole number. The answers along with an explanation of the factors at work follow question 14.

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Posted on 03/06/2022

The case for lower inflation… eventually

The case for lower inflation

The hope for the global economy is that inflation will fall away sharply in 2023. That is seen as the mostly likely outcome by the majority of economic forecasters and central banks – even if they are less confident about it now than they were a year ago. So why, despite shockingly high inflation today, do forecasters expect price pressures and inflation to ease next year?

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Posted on 30/05/2022

Living in an inflationary world

Living in an inflationary world

With UK inflation at the highest level in 40 years and set to hit the 10% mark later this year, households are seeing an acute squeeze on spending power. On Friday, the polling group GfK reported that their measure of UK consumer confidence had dropped to the lowest level since the series started in 1974.

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Posted on 23/05/2022