JamesSmithRF
@jamessmithrf.bsky.social
Research Director at the Resolution Foundation. Previous lives at the Bank of England and in the civil service. Focussed mainly on macroeconomics (mainly).
In his response @robwoodecon.bsky.social emphasises the importance of the risks from US tariffs, pressure on the Fed and how all this will play out for UK fiscal policy.
January 23, 2026 at 10:20 AM
In his response @robwoodecon.bsky.social emphasises the importance of the risks from US tariffs, pressure on the Fed and how all this will play out for UK fiscal policy.
Megan Greene makes the importance of global shocks clear - her analysis shows Fed policy and world shocks have as big an impact on UK inflation as domestic factors.
January 23, 2026 at 10:04 AM
Megan Greene makes the importance of global shocks clear - her analysis shows Fed policy and world shocks have as big an impact on UK inflation as domestic factors.
Megan shows us the importance of US and other global factors in driving the rise in UK government borrowing costs. Is clear that UK specific risk factors increased around the time of the LDI crisis in 2022.
January 23, 2026 at 9:51 AM
Megan shows us the importance of US and other global factors in driving the rise in UK government borrowing costs. Is clear that UK specific risk factors increased around the time of the LDI crisis in 2022.
Megan Greene gets us going by showing us that inflation and interest rates are becoming more globally driven.
January 23, 2026 at 9:45 AM
Megan Greene gets us going by showing us that inflation and interest rates are becoming more globally driven.
Here @resolutionfoundation.org we’re hosting Megan Greene of the BoE’s Monetary Policy Committee. Topic for today: how economic conditions are diverging across US and Europe - plenty to talk about! Hearing from @robwoodecon.bsky.social and our very own @ruthcurtice.bsky.social too.
January 23, 2026 at 9:39 AM
Here @resolutionfoundation.org we’re hosting Megan Greene of the BoE’s Monetary Policy Committee. Topic for today: how economic conditions are diverging across US and Europe - plenty to talk about! Hearing from @robwoodecon.bsky.social and our very own @ruthcurtice.bsky.social too.
It's tricky to unpick what is going on as we don't have monthly profiles from OBR's Nov fcast. But central gov receipts are ~£3bn lower than March profiles and spending ~£4bn higher. Local authorities continue to overspend. Again this looks broadly consistent with the OBR's high borrowing forecast.
January 22, 2026 at 8:08 AM
It's tricky to unpick what is going on as we don't have monthly profiles from OBR's Nov fcast. But central gov receipts are ~£3bn lower than March profiles and spending ~£4bn higher. Local authorities continue to overspend. Again this looks broadly consistent with the OBR's high borrowing forecast.
Quick word on this morning's public finances data for the UK which were pretty much in line with expectations. Borrowing in December was £11.6bn, slightly lower than market expectations of £13.4bn. Year to date, borrowing is £140.4bn, which looks broadly consistent with the OBR's Nov forecast.
January 22, 2026 at 8:08 AM
Quick word on this morning's public finances data for the UK which were pretty much in line with expectations. Borrowing in December was £11.6bn, slightly lower than market expectations of £13.4bn. Year to date, borrowing is £140.4bn, which looks broadly consistent with the OBR's Nov forecast.
Finally, there shd be better news ahead. BoE is forecasting a large (0.5pp), broad-based fall in CPI in January (with further falls after). So extent of falls in goods and services inf towards more normal levels in Jan will be important. That shd reduce doubts at the BoE about further rate cuts.
January 21, 2026 at 8:24 AM
Finally, there shd be better news ahead. BoE is forecasting a large (0.5pp), broad-based fall in CPI in January (with further falls after). So extent of falls in goods and services inf towards more normal levels in Jan will be important. That shd reduce doubts at the BoE about further rate cuts.
The combination of falling wage growth and sticky inflation means that real wage growth is falling back. This is bad news for living standards and requires better growth performance for us to see sustained improvements here.
January 21, 2026 at 8:24 AM
The combination of falling wage growth and sticky inflation means that real wage growth is falling back. This is bad news for living standards and requires better growth performance for us to see sustained improvements here.
Services inflation is more important for the BoE as they are domestically driven. Chart on the left shows progress in the 12m rate has been slow and bumpy. But the good news is that higher freq inflation measures (right) look closer to levels consistent with 2% CPI inflation. This is encouraging!
January 21, 2026 at 8:24 AM
Services inflation is more important for the BoE as they are domestically driven. Chart on the left shows progress in the 12m rate has been slow and bumpy. But the good news is that higher freq inflation measures (right) look closer to levels consistent with 2% CPI inflation. This is encouraging!
You might expect goods-price inflation to be weak given global factors (goods which wd have gone to the US come to the UK because of higher tariffs). But here domestic factors, including NI and some regulation, mean price rises have been sticky. This *should* reverse later this year.
January 21, 2026 at 8:24 AM
You might expect goods-price inflation to be weak given global factors (goods which wd have gone to the US come to the UK because of higher tariffs). But here domestic factors, including NI and some regulation, mean price rises have been sticky. This *should* reverse later this year.
So where are we on the journey back to 2% inflation? This chart shows goods and services. You can see above target inflation in Dec reflects the fact that *both* are higher than normal (we've hit 2% on avg with goods at about 0.9% and services at 3.4%, they are now 2.2% and 4.5%).
January 21, 2026 at 8:24 AM
So where are we on the journey back to 2% inflation? This chart shows goods and services. You can see above target inflation in Dec reflects the fact that *both* are higher than normal (we've hit 2% on avg with goods at about 0.9% and services at 3.4%, they are now 2.2% and 4.5%).
This chart shows contributions to the 0.2pp increase in inflation between Nov and Dec. Biggest factor was tobacco duty which hit in Dec this year (was Nov last year) given the late Budget. But there were rises in (erratic) airfares, as well as a disappointing rise in food prices.
January 21, 2026 at 8:24 AM
This chart shows contributions to the 0.2pp increase in inflation between Nov and Dec. Biggest factor was tobacco duty which hit in Dec this year (was Nov last year) given the late Budget. But there were rises in (erratic) airfares, as well as a disappointing rise in food prices.
So here's the headline picture - UK inflation at 3.4% in December is the highest in the G7, and has been for 7 months now. A big chunk of why UK inflation is proving so sticky is down to govt policy in the form of higher administered prices and increases in National Insurance.
January 21, 2026 at 8:24 AM
So here's the headline picture - UK inflation at 3.4% in December is the highest in the G7, and has been for 7 months now. A big chunk of why UK inflation is proving so sticky is down to govt policy in the form of higher administered prices and increases in National Insurance.
Forget what’s going on up a mountain in Switzerland, here @resolutionfoundation.org we’re talking about UK growth and the government’s struggles to deliver on its key priority. Great panel to chew over where policy can go further. For more, see: www.resolutionfoundation.org/publications...
January 19, 2026 at 9:46 AM
Forget what’s going on up a mountain in Switzerland, here @resolutionfoundation.org we’re talking about UK growth and the government’s struggles to deliver on its key priority. Great panel to chew over where policy can go further. For more, see: www.resolutionfoundation.org/publications...
At RF we are talking prospects for 2026, focusing on growth, living standards and…Zombies! Great panel with @claire-ainsley.bsky.social and @luketryl.bsky.social and our very own Greg Thwaites and @ruthcurtice.bsky.social.
Read our NY outlook here: www.resolutionfoundation.org/publications...
Read our NY outlook here: www.resolutionfoundation.org/publications...
January 8, 2026 at 10:02 AM
At RF we are talking prospects for 2026, focusing on growth, living standards and…Zombies! Great panel with @claire-ainsley.bsky.social and @luketryl.bsky.social and our very own Greg Thwaites and @ruthcurtice.bsky.social.
Read our NY outlook here: www.resolutionfoundation.org/publications...
Read our NY outlook here: www.resolutionfoundation.org/publications...
More than that, while the BoE says that measures in the Budget should mean inflation is around 0.5ppts lower in the coming months than previously thought (similar to the OBR assessment in the chart below), that won't have much bearing on its view of interest rates going forward.
December 18, 2025 at 12:59 PM
More than that, while the BoE says that measures in the Budget should mean inflation is around 0.5ppts lower in the coming months than previously thought (similar to the OBR assessment in the chart below), that won't have much bearing on its view of interest rates going forward.
Again, at first blush, there has been more good news here with headline inf lower than expected in Nov and services inflation - a key measure for the MPC - falling on both the annual rate and higher frequency measures - see below.
December 18, 2025 at 12:59 PM
Again, at first blush, there has been more good news here with headline inf lower than expected in Nov and services inflation - a key measure for the MPC - falling on both the annual rate and higher frequency measures - see below.
Onto the stickiness of inflation. Here the UK remains an outlier relative to other countries with the highest headline inflation in the G7 (albeit with no US data for a couple of months).
December 18, 2025 at 12:59 PM
Onto the stickiness of inflation. Here the UK remains an outlier relative to other countries with the highest headline inflation in the G7 (albeit with no US data for a couple of months).
Meanwhile, wage growth has been falling back and higher-frequency measures, now looks pretty consistent with hitting the 2% inflation target.
December 18, 2025 at 12:59 PM
Meanwhile, wage growth has been falling back and higher-frequency measures, now looks pretty consistent with hitting the 2% inflation target.
Lets start with the labour market. Here there has been clear signs of the labour market loosening with unemployment rising faster than expected by the BoE and OBR and payrolled employment continuing to fall.
December 18, 2025 at 12:59 PM
Lets start with the labour market. Here there has been clear signs of the labour market loosening with unemployment rising faster than expected by the BoE and OBR and payrolled employment continuing to fall.
As expected, BoE cuts rates by 0.25ppts to 3.75%, the sixth cut in this cycle on a tighter-than-expected 5-4 vote. Bigger question for today, though, is how BoE sees balance of stubborn inflation and a weakening labour market. A short thread on that to follow...
December 18, 2025 at 12:05 PM
As expected, BoE cuts rates by 0.25ppts to 3.75%, the sixth cut in this cycle on a tighter-than-expected 5-4 vote. Bigger question for today, though, is how BoE sees balance of stubborn inflation and a weakening labour market. A short thread on that to follow...
So with the lab mkt continuing to loosen and today's big fall in headline inflation (which BoE have been emphasising), an interest rate cut is all but nailed on for tomorrow. Big question for the BoE is whether recent data point to the need for faster (and/or more) rate cuts in the coming months.
December 17, 2025 at 8:57 AM
So with the lab mkt continuing to loosen and today's big fall in headline inflation (which BoE have been emphasising), an interest rate cut is all but nailed on for tomorrow. Big question for the BoE is whether recent data point to the need for faster (and/or more) rate cuts in the coming months.
Finally, although falling inflation is good news, wage growth is slowing even more sharply - so real wage growth is now falling (and particularly quickly on the RTI measure). With further slowing in likely in the coming months, this is bad news for growth in living standards.
December 17, 2025 at 8:57 AM
Finally, although falling inflation is good news, wage growth is slowing even more sharply - so real wage growth is now falling (and particularly quickly on the RTI measure). With further slowing in likely in the coming months, this is bad news for growth in living standards.
What about underlying inflation? This chart focuses on services inflation which fell again this month and is now below the BoE Nov forecast. If we look at high-freq inflation rates, services inflation is now below long-run averages (so shd be consistent with hitting the 2% target).
December 17, 2025 at 8:57 AM
What about underlying inflation? This chart focuses on services inflation which fell again this month and is now below the BoE Nov forecast. If we look at high-freq inflation rates, services inflation is now below long-run averages (so shd be consistent with hitting the 2% target).