Monetary policy, inflation in The Monday Briefing
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Throughout history economies have been shaped by shocks, from recessions to technological shifts and energy transitions. The Great Depression helped change thinking about the role of government, paving the way for a permanent expansion in the state. The switch from steam power to electricity triggered a vast reorganisation of manufacturing.
Sentiment in financial markets changes quickly. The big worry for most of the last year has been about collapsing growth and falling prices. Now markets are fretting about inflation. Such fears were behind the sharp sell-off in US equities in the early part of last week.
The emergence of a novel respiratory disease in late 2019 in Hubei province marked the start of what was to become a global pandemic. While the first recorded cases were in China, China has suffered a remarkably low death rate and has avoided the deep recessions that have befallen the rest of the world.
The world is emerging from a deep recession, and the recovery is coming faster than expected. With more than 800m vaccines administered globally, activity holding up despite lockdowns and additional fiscal stimulus coming, economists have been upgrading their GDP forecasts.
Rarely has there been more uncertainty regarding the course of the public finances over the next five years. In this note we aim to answer some of the big questions for the economy in light of the 2021 budget.
Join me for our Spring economic update webinar on Tuesday, 30 March, 14:30–15:30 GMT. To register please visit: https://event.webcasts.com/starthere.jsp?ei=1440317&tp_key=533939db50
Join our next fortnightly COVID-19 webinar on Thursday, 11 March, at 13:00 GMT where Ian Stewart and Karen Taylor will give the latest public health and economic updates. Our guest will be Sir Howard Bernstein, strategic advisor, Deloitte and former chief executive of Manchester City Council and former head of Paid Service for the Greater Manchester Combined Authority. Sir Howard will offer his perspective on the challenges and opportunities of the UK government's 'levelling up' agenda and how it might impact economic outlook for the regions and the UK.
When he became prime minister in July 2019 Boris Johnson brought with him a new priority in the form of ‘levelling up’. It’s an old idea and an enduring political concern, one that, getting on for a hundred years, has gone by the name of regional policy. A growing focus on inequalities of income, health and opportunity across Britain has brought regional policy back to the fore. The Conservative’s 2019 general election success in Labour ‘red wall’ seats in the North, the Midlands, Yorkshire and Wales, has lent political weight to the cause. And in the last year the pandemic has added a new dimension to regional inequalities. Levelling up’s time has arrived.
Join our next fortnightly COVID-19 webinar this Thursday, 25 February, at 13:00 GMT when we will examine the latest public health and economic data and look at how the pandemic is likely to accelerate the adoption of technology.
Please register here: https://event.webcasts.com/starthere.jsp?ei=1365454&tp_key=8f4d835e66&sti=mmb.
It says something about the world we’re in that a 9.9% contraction in the UK economy in 2020 is seen as good news by economists. But with the economy expanding by a healthy 1.0% in the fourth quarter of last year, despite November’s lockdown, GDP ended up shrinking slightly less in 2020 than had been feared.