Economics: The UK’s problems are more than just cyclical

The BoE’s latest supply-side review more important than ever

The Bank of England will release the results of its annual supply-side stocktake this week. Given recent labour supply issues, that could tell us something about how far the Bank intends to push rates. It’ll also tell us what’s in store in the medium-term.

Brexit & the pandemic have exacerbated the UK’s growth challenges

It’s clear that the UK’s structural problems have been exacerbated by both Brexit and the pandemic. Underinvestment is a key concern, labour participation has dropped, and the UK’s new trading relationships could weigh on productivity.

A big policy challenge lies ahead

Even if policymakers solve the current inflation problem, they still face an uphill struggle to boost the UK’s growth potential. With fiscal policy likely to be a drag, and private sector balance sheets under pressure, an exogenous shock is needed.