Chief Economist, Heteronomics

Phil Rush

Chief Economist

Heteronomics

Heteronomics represents a different kind of economics. We believe analysis should delve into the details of what is really going on, rather than using overly simplistic assumptions to quick-sell stories. Independence from myopic institutional pressures allows us to focus on the realities underlying your asset allocation decisions, without the conflicts of the old market structures. Heteronomics targets the themes driving UK asset prices, offering the benefits of depth, independence and ultimately price.

UK-centric macro research

Macroeconomics

<ul>
<li>UK GDP growth more than halved again in October to 0.4% m-o-m, despite output still being almost 8% below its pre-Covid level. The ongoing upheaval of aggressively evolving restrictions killed the recovery even before the renewed destruction of lockdown 2.</li>
<li>The UK is still performing especially poorly relative to its peers. However, most of the real output shortfall is arguably related to the measurement of public services. Counting wasteful nominal spending risks overstating the future tax potential, though.</li>
</ul>


UK GDP growth more than halved again in October to 0.4% m-o-m, despite output still being almost 8% below its pre-Covid level. The ongoing upheaval of aggressively evolving restrictions killed the recovery even before the renewed destruction of lockdown 2.
The UK is still performing especially poorly relative to its peers. However, most of the real output shortfall is arguably related to the measurement of public services. Counting wasteful nominal spending risks overstating the future tax potential, though.


<ul>
<li>Downgraded growth forecasts and increased expenditures drove another large rise in the Spending Review’s projections for public sector net borrowing. However, my bottom-of-consensus view for growth in 2021 creates risks of even more borrowing.</li>
<li>Despite the desperate need for supportive creditors, the government sanctioned a permanent reduction in the RPI inflation measure that will be materially detrimental for inflation-linked gilts. No compensation will be offered in good faith… its buyer beware.</li>
</ul>


Downgraded growth forecasts and increased expenditures drove another large rise in the Spending Review’s projections for public sector net borrowing. However, my bottom-of-consensus view for growth in 2021 creates risks of even more borrowing.
Despite the desperate need for supportive creditors, the government sanctioned a permanent reduction in the RPI inflation measure that will be materially detrimental for inflation-linked gilts. No compensation will be offered in good faith… its buyer beware.


<ul>
<li>UK retail sales exceeded expectations again with a 1.2% m-o-m surge in October. It was driven by an extension of recent trends. Specifically, the rotation towards consumption both from and for the home environment ahead of another lockdown within it.</li>
<li>The reliance on consumer goods over services remains negative for overall GDP, which is set to be smashed again by restrictions this winter. Divergence within the sector has also increased with the broad experience recessionary while a small set surge.</li>
</ul>


UK retail sales exceeded expectations again with a 1.2% m-o-m surge in October. It was driven by an extension of recent trends. Specifically, the rotation towards consumption both from and for the home environment ahead of another lockdown within it.
The reliance on consumer goods over services remains negative for overall GDP, which is set to be smashed again by restrictions this winter. Divergence within the sector has also increased with the broad experience recessionary while a small set surge.


UK: Narrow Retail Rise in Broad Recession

<ul>
<li>UK inflation increased by a tenth more than we expected in October to 0.7% y-o-y on the CPI and 1.3% on the RPI. Upside news in clothing prices is likely to be short-lived owing to the payback relationship into Novembers being the strongest of the year.</li>
<li>The extent of the seasonality around yearend remains a key uncertainty in our forecast profile. A return towards the target should only occur in the Spring amid sizeable base effects, while the inflation outlook is unlikely to threaten the BoE’s easing programme.</li>
</ul>


UK inflation increased by a tenth more than we expected in October to 0.7% y-o-y on the CPI and 1.3% on the RPI. Upside news in clothing prices is likely to be short-lived owing to the payback relationship into Novembers being the strongest of the year.
The extent of the seasonality around yearend remains a key uncertainty in our forecast profile. A return towards the target should only occur in the Spring amid sizeable base effects, while the inflation outlook is unlikely to threaten the BoE’s easing programme.


<ul>
<li>GDP growth continued to slow in September to a mere 1.1% m-o-m. Losing momentum at this rate implies over a quarter of the lockdown hit would fail to be mechanically recovered. A second lockdown in November is set to compound the economic damage.</li>
<li>Mobility metrics have only fallen to August levels as the public appears to be reluctant to stay home this time. However, prohibitions on economic activity mean the hit to output is still set to be large, where I assume a level similar to June.</li>
</ul>


GDP growth continued to slow in September to a mere 1.1% m-o-m. Losing momentum at this rate implies over a quarter of the lockdown hit would fail to be mechanically recovered. A second lockdown in November is set to compound the economic damage.
Mobility metrics have only fallen to August levels as the public appears to be reluctant to stay home this time. However, prohibitions on economic activity mean the hit to output is still set to be large, where I assume a level similar to June.


United Kingdom

The British Pound Sterling is the official currency of The United Kingdom. 

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

GBP (GBPUSD CURNCY)

UK: The Method to Underperform Peers

The UK's recovery effectively ended even before the new lockdown, with output almost 8% below its pre-Covid level. Most of the UK's real...

Phil Rush

UK: Buyer Beware for Creditors

The UK government’s message amounts to “we have at least another £1 trillion of gilt issuance heading your way… buyer beware”.That’s not an...

Phil Rush

UK: Narrow Retail Rise in Broad Recession

The rotation towards consumption both from and for the home environment continues and is negative for GDP. Increasingly divergent retailer...

Phil Rush

UK: Price Rises Over-Dressed in Oct-20

The upside in UK inflation from clothing should unwind in Nov. Yearend seasonality remains a key uncertainty in our forecast profile, but the pull...

Phil Rush

UK: Stumbling into a Fall for Winter

UK GDP growth halved again in Sep, implying over 25% of the lockdown hit would fail to be easily recovered. Another lockdown has hit mobility to...

Phil Rush

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)