Economic Perspectives -

This week’s announcement on easing lockdown crucially important, as record borrowing continues and retail sales slump

The latest Perspective from Ruth Lea CBE, Economic Adviser to Arbuthnot Banking Group.


22nd February 2021


Ruth Lea CBE


In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest UK developments:

  • The Prime Minister is due to announce a roadmap outlining the various stages for easing lockdown restrictions on 22 February.
  • Public sector net borrowing (PSNB) in January 2021 was £8.8bn, a record for January, compared with negative £10.4bn in January 2020.
  • The PSNB in the first ten months of FY2020 was £270.6bn, compared with £48.1bn in the same period last year, the highest borrowing in any April-January period on record.
  • However, borrowing for FY2020 could undershoot the OBR’s November forecast of £393.5bn, by around £40-50bn.  
  • Public sector net debt (PSND) at end-January 2021 was £2,114.6bn (97.9% of GDP) compared with £1,786.0bn (83.2%) at the same point last year.
  • There were modest increases in the main measures of consumer and producer prices inflation in January.
  • ONS data confirmed the housing market was still buoyant in December. Prices rose 8.5% (YOY) in December, the highest annual growth rate since October 2014, compared with 7.1% in November.
  • Retail sales volumes slumped by 8.2% (MOM) in January 2021, as tighter coronavirus restrictions affected sales.

The latest Markit flash indicators showed:

  • UK output may have stabilised in February (Composite Output Index, 49.8), after the significant fall in January (index, 41.2), mainly reflecting the near-stabilisation of the services sector.
  • The German Composite Output Index firmed slightly to 51.3 in February. Services remained depressed, but manufacturing picked up partly reflecting buoyant export orders.
  • The French Composite Output Index weakened a tad to 45.2 in February. Even though manufacturers saw a modest expansion, service providers posted another decline in activity.
  • In contrast, the US Composite Output Index was as high as 58.8 in February (little changed from January). Activity was spurred by accelerating service sector activity and robust growth of manufacturing.

Ruth Lea said “The Prime Minister’s announcement on the roadmap outlining the various stages for easing lockdown restrictions is absolutely crucial. There is no doubt that the current severity of the restrictions is undermining activity and, consequently, it is widely expected that GDP will experience a “double-dip” in 2021Q1. Moreover, there is little doubt that this announcement will prove to be of greater economic significance than the Budget on 3 March.”



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Author -

Ruth Lea CBE

Ruth Lea CBE

Economic Adviser, Arbuthnot Banking Group

Ruth Lea CBE has been Arbuthnot Banking Group’s Economic Adviser since 2007 and was an Independent Non-Executive Director from 2005-2016.

Ruth co-founded Global Vision in 2007 and was Director until 2010, and was previously the Director of the Centre for Policy Studies (from 2004 to 2007), Head of the Policy Unit at the Institute of Directors (from 1995 to 2003) and Economics Editor at ITN (from 1994 to 1995).  Prior to ITN she was Chief UK Economist at Lehman Brothers, Chief Economist at Mitsubishi Bank, worked for 16 years in the Civil Service (the Treasury, the DTI, the Civil Service College and the Central Statistical Office) and was an economics lecturer at Thames Polytechnic (now the University of Greenwich).

She is the author of many papers and articles on economic issues and has been a Governor of the London School of Economics and Council Member of the University of London.

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