The UK’s Deleveraging Failure

The synchronised nature of the global economic recovery has fanned speculation that the post-crisis deleveraging in developed countries has finally come to an end. However, we err on the side of caution and cite evidence from the UK, which suggests there has been...

UK Gilts Overvalued

UK gilts are overvalued, currently yielding only 1%. The UK has seen a boom in consumer credit in recent years, with rates around 10% YoY in the main categories of consumer lending (top chart). Rising inflation has pinched wages, with the result real wages are now...

UK Inflation Set to Start Rising Again

UK inflation has been falling, driven mainly by a fall in consumer demand, and last year’s VAT increase falling out of the year-on-year comparisons.  Looking under the bonnet, however, reveals a disconnect between inflation of ‘necessary’ and ‘discretionary’ goods. ...