2021-10-07-牛津经济研究院-UK_Households_start_to_feel_the_squeeze_6页_283kb

UK Economic Briefing Summary (Oct 2021)

Key Message

Households in the UK are experiencing financial pressure from the withdrawal of government support schemes, such as furlough, coinciding with high inflation. Oxford Economics forecasts persistent inflation and revised economic growth outlooks.

Inflation and Energy Prices

Inflation is driven by surging oil and gas prices, expected to push CPI inflation to 4.5% by early 2022. Energy costs, including a new energy price cap revision, are likely to rise, potentially exceeding household budgets.

Labour Market

The end of furlough schemes is set to ease financial strains on businesses, but households may face job losses if employers cut costs. Labour market data shows positive employment trends, but ongoing uncertainty includes modest unemployment increases and furlough scheme wraps, with a slight Q4 uptick expected.

GDP and Growth Outlook

GDP growth for 2022 is projected lower than previously due to inflation and reduced economic activity. High-frequency indicators suggest a pickup in services and consumption but must account for winter-related slowdowns.

Monetary Policy and Risks

The Monetary Policy Committee (MPC) is considering interest rate hikes amid hawkish perspectives on inflation. A rate increase could risk dampening consumer spending and economic growth. Uncertainty surrounds consumer resilience and policy decisions.

Supporting Data

Inflation is expected to stay above 3% until late 2022, negatively affecting household spending power. Calendar events highlight upcoming labour market and economic releases that could refine forecasts.