PERSPECTIVES - Arbuthnot Latham
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PERSPECTIVES
By Ruth Lea, Economic Adviser to the Arbuthnot Banking Group
Ruth Lea
The Bank: no policy Economic Adviser
Arbuthnot Banking Group
tightening until significant ruthlea@arbuthnot.co.uk
07800 608 674
progress in eliminating spare
capacity and achieving inflation target
22nd March 2021
Introduction: no change from the Bank…
At the meeting ending on 17 March 2021, MPC members voted to leave monetary policy unchanged,
unanimously voting for:1
• Maintaining the Bank Rate at 0.1%.
• Maintaining the stock of sterling non-financial investment-grade corporate bond purchases, financed
by the issuance of central bank reserves, at £20bn.
• Continuing with its existing programme of UK government bond purchases, financed by the issuance of
central bank reserves, maintaining the target for the stock of these purchases at £875bn. The existing
programme of £150bn of UK government bond purchases started in January and the MPC continued to
expect it to be completed by around the end of 2021. The MPC also continued “to envisage that the
pace of purchases could remain at around its current level initially, with flexibility to slow the pace of
purchases later. Should market functioning worsen materially, the BoE stood ready to increase the
pace of purchases to ensure the effective transmission of monetary policy. The MPC would keep the
asset purchase programme under review. If needed, there was scope for the BoE to re-evaluate the
existing technical parameters of the gilt purchase programme”.
• The Bank noted that, as of 17 March 2021, the total stock of assets held in the Asset Purchase Facility
(APF) had reached £785bn, a net increase of £40bn as part of the £150bn programme of UK
government bond purchases announced on 5 November 2020.
On policy direction, the MPC confirmed that it did not intend to tighten monetary policy at least until
“…there was clear evidence that significant progress was being made in eliminating spare capacity and
achieving the 2% inflation target sustainably”. The minutes noted that the MPC’s Remit had been updated
at Budget 2021 (4 March 2021), setting out that the economic strategy of the Government included
supporting the transition to a net zero emissions economy. There was no policy update on negative interest
rates in the minutes, though it remains in “the toolbox”.
On the global economy, the MPC said that global GDP growth expectations had been improved by the
substantial new US fiscal stimulus package, which would have spill-over effects for demand across the
world including in the UK. Concerning advanced economy longer-term government bond yields, these had
risen significantly since the MPC’s February meeting and, for the most part, the movement had reflected
1higher real yields. The upward movement in yields appeared to have been driven by positive news on
global economic growth, including on some vaccination programmes and vaccine effectiveness, as well as
the size of the US fiscal support package.
On the UK economy, the minutes adopted a cautious tone. They said “…the outlook for the economy, and
particularly the relative movement in demand and supply during the recovery from the pandemic,
remained unusually uncertain. It continued to depend on the evolution of the pandemic, measures taken to
protect public health, and how households, businesses and financial markets respond to these
developments”. But, having said that, they ventured “…the news in recent plans for the easing of
restrictions on activity may be consistent with a slightly stronger outlook for consumption growth in
2021Q2 than was anticipated in the February Report”. This statement was notably more cautious than
Governor Andrew Bailey’s recent comment that he expected the economy to “…get back, at the end of this
year, to where it was at the end of 2019”.2-3 The minutes noted that GDP had risen by 1.0% (QOQ) in
2020Q4, a little stronger than expected in the February Inflation Report, whilst GDP had fallen by 2.9%
(MOM) in January, smaller than Bank staff expectations.
Turning to the labour market, the MPC said that the announced extension to the CJRS (furlough scheme)
was likely to mean that the near-term rise in the LFS unemployment rate would be more moderate than
suggested by the MPC’s February Report projections. Concerning inflation, Bank staff expected CPI inflation
to return to around the 2% target in the spring, mainly reflecting higher energy price inflation, as the
effects of earlier falls in oil prices drop out of the annual comparison (base effects) as well as more recent
increases in energy prices. The announcements in Budget 2021 on the extension of the VAT reduction for
hospitality, holiday accommodation and attractions, and the freezing of some duties, constituted small
downside news for the short-term inflation outlook, but were more than offset by the energy price news
since the February Report. Significantly, it was, however, expected that these developments would have
few direct implications for inflation over the medium term. In other words, the minutes seemed to be
relatively relaxed about the future path of inflation.
…and no change from the Fed
The Fed pledged to continue its accommodative support for the US economy at its March meeting (16-17
March) and there were no policy changes. Moreover, the Fed was also clearly in no hurry to tighten policy.
Specifically, they said:4
• “The Committee (the Federal Open Market Committee (FOMC)) seeks to achieve maximum
employment and inflation at the rate of 2% over the longer-run. With inflation running persistently
below this longer-run goal, the Committee will aim to achieve inflation moderately above 2% for some
time so that inflation averages 2% over time and longer-term inflation expectations remain well
anchored at 2%. The Committee expects to maintain an accommodative stance of monetary policy until
these outcomes are achieved.
• The Committee decided to keep the target range for the federal funds rate at 0 to ¼% and expects it
will be appropriate to maintain this target range until labour market conditions have reached levels
consistent with the Committee’s assessments of maximum employment and inflation has risen to 2%
and is on track to moderately exceed 2% for some time.
• In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least
$80bn per month and of agency mortgage-backed securities by at least $40bn per month until
substantial further progress has been made toward the Committee's maximum employment and price
stability goals.”
Fed Chair Jay Powell was asked about the economic impact of rising bond yields (the effective tightening of
monetary policy) at his press conference and gave the impression he was not too concerned about it.5 He
said “…I would be concerned by disorderly conditions in markets or by a persistent tightening of financial
conditions that threaten the achievement of our goals. We think the stance of our monetary policy remains
appropriate. Our guidance on the federal funds rate and on asset purchases is providing strong support for
2the economy. And we’re committed to maintaining that patiently accommodative stance until the job is
well and truly done”.
The economic projections improved compared with December.6 GDP growth was projected to 6.5% for
2021 (4.2% in December), boosted by President Biden’s $1.9tn relief package as well as the progress of the
vaccine programme (chart 1a).7 Powell noted at his press conference that “…the recovery has progressed
more quickly than generally expected”. Similarly, projections for the unemployment rate were revised
down again (chart 1b), Powell commenting “…as with overall economic activity, conditions in the labour
market have turned up recently”.
The projections for CPI inflation were revised up, especially for 2021, when inflation is expected to rise to
2.4%, partly reflecting base effects (chart 1c). As Powell explained “…we could see upward pressure [this
year] on prices if spending rebounds quickly as the economy continues to reopen, particularly if supply
bottle-necks limit how quickly production can respond in the near term. However, these one-time increases
in prices are likely to have only transient effects on inflation.” The Fed’s inflation objective is for 2% over
the longer-run (see above), and last August it relaxed its objective to be an “average” of 2% inflation, rather
than making 2% a fixed goal, giving it more flexibility.8
Finally, the projected appropriate policy path for the Federal funds rate (%) was unchanged at 0.1% (0-
0.25%) until end-2023 (annex table 1). Powell noted that the Fed would “…ensure that monetary policy will
continue to deliver powerful support to the economy until the recovery is complete”.
Chart 1a FOMC: US GDP growth (%), Q4 (median estimates), June, September, December 2020, March
2021
7 6.5
6
5
5 4.2
4
4 3.5
3.2 3.3
3
3 2.5 2.4
2.2
1.8 1.9 1.8 1.8
2
1
0
2021Q4 2022Q4 2023Q4 Longer run
Jun-20 Sep-20 Dec-20 Mar-21
Chart 1b FOMC: US unemployment rate (%), Q4 (median estimates), June, September, December 2020,
March 2021
7 6.5
6 5.5 5.5
5
5 4.5 4.6
4.2 4 4.1 4.1 4.1 4
3.9 3.7 3.5
4
3
2
1
0
2021Q4 2022Q4 2023Q4 Longer run
Jun-20 Sep-20 Dec-20 Mar-21
3Chart 1c FOMC: PCE inflation (%). Q4 (median estimates), end-year, June, September, December 2020,
March 2021
3
2.4
2.5 2.1
1.9 2 2 2 2 2 2 2
2 1.8 1.7 1.8
1.6 1.7
1.5
1
0.5
0
2021 2022 2023 Longer run
Jun-20 Sep-20 Dec-20 Mar-21
Source: FOMC, “FOMC projections materials: the summary of economic projections (SEP)”, 17 March 2021,
and previous. See annex table 1. These are the economic projections of Federal Reserve Board members &
Federal Reserve Bank presidents under their individual assessments of projected appropriate monetary
policy.
Public borrowing continues at record levels…
The ONS estimated that public sector net borrowing (PSNB-ex, excluding public sector banks) in February
2021 was £19.1bn, compared with £1.6bn in February 2020. £19.1bn was the highest February figure since
current records began in January 1993 (chart 2).9
Public sector borrowing is broadly accounted for by the activities of central government. Central
government net borrowing (CGNB) was £16.0bn in February 2021, compared with negative £0.8bn in
February 2020. There was a relatively modest fall in CG receipts (YOY), but CG current spending was very
significantly higher.
Specifically, CG tax receipts were £46.2bn in February 2021, just £1.5bn less than in February, but there
were notable falls in taxes on production such as Value Added Tax (VAT), Business Rates and fuel duty. Self-
assessed Income Tax receipts were £4.2bn in February 2021, £0.9bn more than in February 2020. But the
ONS warned that, in the light of the government’s tax deferral policy, it was advisable to look at combined
self-assessed Income Tax receipts across the whole financial year when drawing conclusions from year-on-
year comparisons. Turning to spending, CG bodies were estimated to have spent £72.6bn on day-to-day
activities (current expenditure) in February 2021, £14.2bn more than in February 2020. This increase
included £3.9bn expenditure on coronavirus job support schemes (see annex tables 2a and 2b for updated
information on the Government’s schemes). In addition, CG net investment was £4.0bn in February 2021
compared with £2.4bn a year earlier.
The PSNB in the first 11 months of FY2020 (April 2020-February 2021) was £278.8bn, compared with
£50.6bn in the same period last year, the highest borrowing in any April-February period on record (chart
2). The ONS commented that the “…this substantial increase largely reflects the impact of the coronavirus
pandemic on the public finances, with the furlough schemes alone adding £74.4bn to borrowing in the
financial year-to-February 2021”.
The OBR forecast (on 4 March, in their Economic and Fiscal Outlook) a PSNB of £355bn for FY2020
(compared with £57.7bn in FY2019), implying that borrowing would have to be about £75bn in March 2021
(compared with £7.1bn in March 2020) for the forecast to be met.10 This looks, at face value, an incredible
figure, but the ONS warned “…it should be noted that the OBR borrowing forecast for FY2020 includes an
estimated £27.2bn in write-offs of the business loans under the government’s coronavirus schemes
whereas ONS outturn data does not yet include any estimates for these write-offs”. But even allowing for
4£27bn of write-offs, this still suggests “underlying” borrowing of £48bn, which looks around £10bn too
high.
Chart 2 Public sector borrowing (£bn), ONS (cumulative & monthly), FY2019 & FY2020
300
250 Cumulative, FY2020
200
150
100
Cumulative, FY2019
Monthly, FY2020
50
0 Monthly, FY2019
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
-50
Cumulative, FY2019 Cumulative, FY2020 Monthly, FY2019 Monthly, FY2020
Source: ONS, “Public sector finances: February 2021, 19 March 2021.
…and the public sector net debt/GDP ratio continues to rise
The Government’s fiscal “targets” were effectively changed in March 2021 Budget, when the Chancellor
calibrated his Budget decisions in order to deliver:11-12
• A current budget very close to balance (as in March 2020), but the previously stated goal of achieving
that by the third year of the forecast period was not retained.
• An underlying (excluding the Bank of England) public sector net debt (PSND)/GDP ratio very close to
stable in the medium term. Note the Treasury’s focus on stabilising debt had shifted from headline
debt (including the uneven effects of the Bank of England) to underlying debt (excluding the Bank of
England). The Bank of England’s (BoE’s) contribution to debt is largely a result of its quantitative easing
activities via the Bank of England Asset Purchase Facility Fund (APF) and Term Funding Scheme (TFS).
The OBR analysed these two “targets” for the March 2021 Budget, along with the second and third targets
from the March 2020 Budget:
• A threshold for the ratio of debt interest to revenues (DIR) of 6%, above which action would be taken
to put the debt-to-GDP ratio on a downward path.
• A ceiling on public sector net investment (PSNI) as a share of GDP of 3% on average over the five-year
forecast period.
Monthly updates are effectively available for two of these metrics: the PSND/GDP ratio and the ratio of
debt interest to revenues.
Firstly, concerning PSND/GDP, the ONS publishes the PSND (excluding public sector banks, but including the
Bank of England) to GDP ratio as a matter of course. At end-February 2021 PSND was £2,131.2bn (97.5% of
GDP) compared with £1,784.0bn (83.4%) at the same point last year, and the ONS commented that “…the
increase in debt over this period combined with a fall in gross domestic product (GDP) have all helped push
public sector net debt as a ratio of GDP to levels last seen in the early 1960s”.13 The ONS has warned that
their monthly GDP estimates for recent periods are based on official (OBR) projections and are subject to
revision.14 They also release the underlying PSND data (excluding the Bank of England) along with the BoE’s
contribution (chart 3a) and provide data for the underlying PSND/GDP ratio (chart 3b). These charts
indicate that the underlying PSND/GDP ratio increased sharply in FY2019 (YOY) and has done so far in
5FY2020 (YOY), though less sharply than the PSND/GDP ratio. At end-February the underlying PSND was
£1,898.8bn (86.9% of GDP), compared with £1,610.9bn (75.3% of GDP) a year earlier.
Secondly, concerning the DIR rule, the debt-interest-to-revenue ratio was 2.0% in the rolling 12-months to
February 2021, compared with 3.4% a year earlier, and well below the 6.0% target level.
Chart 3a Underlying PSND (excluding Bank of England) & BoE contribution, FY1993-FY2020, end-March,
except FY2020 (end-February) (£bn)
2500
2000
1500
1000
500
0
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
-500
PSND exc BoE BoE contribution
Chart 3b PSND/GDP ratio for FY1993-FY2020, end-March, except FY2020 (end-February); and underlying
PSND/GDP ratio for FY1997-FY2020
120
100
80
60
40
20
0
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
PSND (% GDP) Underlying PSND (% GDP)
Source: (i) ONS, “Public sector finances: February 2020”, 19 March 2021, figure 8 for BoE data (for example,
March 1994 is the observation for end-FY1993 and February 2021 is the observation for FY2020); (ii) ONS,
“Public sector finances: February 2020”, 19 March 2021, table PSA1 for PSND/GDP data, underlying data
available from FY1997.
London as an international financial centre: still second only to New York
The Global Financial Centres Index (GFCI), compiled by Financial Centre Futures (FCF), has been running
since March 2007. It provides evaluations of competitiveness and rankings for key financial centres. There
were 114 financial centres in the main index in the March 2021 report (GFCI29), whilst 126 centres in all
were researched.15 Two sets of data are used in compiling the GFCI:
• 143 instrumental factors, which are objective, quantitative measures provided by third parties
including the World Bank, the Economist Intelligence Unit, the OECD and the UN. The factors used in
the GFCI model are then grouped into five broad “areas of competitiveness” for analysing the financial
6centres: business environment, human capital, infrastructure, financial sector development, and
reputational and general.
• Financial centre assessments provided by respondents to the GFCI online questionnaire. GFCI 29 used
65,507 assessments from 10,774 respondents. The GFCI does not include the financial centre
assessments of the respondent’s own centre. A London-based respondent’s assessment of London, for
example, would be excluded.
The main finding was that New York retained its first place in the index (chart 4a) and, (31 December 2021).
London’s ratings were just one point ahead of the third-placed Shanghai (see annex table 3).16 More
specifically, New York was top-ranked in four of the five of the GCFI’s identified “areas of competitiveness”
(business environment, human capital, infrastructure and reputation), and second in financial sector
development. London was ranked top in financial sector development, second in human capital and
infrastructure, and third in business environment and reputation. The FCF commented that “…a greater
proportion of respondents in London are less certain than those in other centres, reflecting the continuing
uncertainty about future trading relations with the EU and the rest of the world”.
Shanghai was, as already noted, was in third spot, closely followed by Hong Kong, Singapore and Beijing,
whilst Tokyo dropped to 7th place from fourth. Shenzhen improved its relative standing to become the 8th
placed centre, followed by a rising Frankfurt, and Zurich. It was surmised that Brexit could have contributed
to Frankfurt’s improvement.
The FCF noted that the average rating of centres in the index dropped by a modest 3.5 points from GFCI 28
(September 2020), which “…may indicate more confidence in the financial system than in the first stages of
the Covid-19 pandemic. The fact that overall ratings have not recovered to the levels that we saw in 2019
reflects the continuing uncertainty around international trade, the impact of the Covid-19 pandemic, and
geopolitical and local unrest.”
Chart 4a Global Financial Centres Index, top 10 centres (Mar 2021 ranking), Sep 2019, Mar 2020, Sep
2020, Mar 2021
18
16
16 15
1414
14 13
12 11
1010
10 9 9 9
8
8 777 7
6 6 6 6
6 5 5 5 5
4 4 4 4
4 33 3 3
2222
2 1111
0
New York London Shanghai Hong Singapore Beijing Tokyo Shenzhen Frankfurt Zurich
Kong
Sep-10 Mar-20 Sep-20 Mar-21
7Chart 4b Global Financial Centres Index, top 10 European centres, with their global rankings
60
50 48
42 42
40 38 37 37
32
29 30
30 26 26 27 28
25 25
21 22
20
20 18 17 17 17 18
15 16 1414 14 15
13 12 13
9 1010 9
10
2222
0
Sep-19 Mar-20 Sep-20 Mar-21
Sources: Financial Centre Futures, “The Global Financial Centres Index (GFCI)”, 26 (Sep 2019), 27 (Mar
2020), 28 (Sep 2020), 29 (Mar 2021). See also annex table 3.
The report also compiled sub-indices for industry sectors by using only the responses provided by people
working in those industries (table 1). New York remained in the leading position in this analysis, coming first
in all areas except insurance (where it was fourth). London retained second place to New York in
investment management, professional services and government/regulatory matters and improved its
position in trading (fourth in September). Elsewhere, London was fourth in banking (second in September)
and finance (no change), fifth in fintech (from fourth) and sixth in insurance (from fifth). Outside New York
and London, the continuing dominance of Shanghai, Hong Kong and Singapore is clear.
Table 1 Industry sub-indices – top 5 financial centres
Ran Banking Investment Insuranc Profession Governme Finance FinTech Trading
k manageme e al services nt &
nt regulatory
1 New New York Shangha New York New York New York New New
York i York York
2 Shangh London Singapor London London Shanghai Singapor London
ai e e
3 Hong Hong Kong Beijing Singapore Zurich Beijing Shangha Singapor
Kong i e
4 London Singapore New Hong Kong Singapore London Hong Hong
York Kong Kong
5 Beijing Shanghai Hong Shenzhen Geneva Luxembour London Shangha
Kong g i
Source: Financial Centre Futures, “The Global Financial Centres Index (GFCI)”, number 29, March 2021.
Update: oil prices
In January we discussed the part-recovery in oil prices, specifically after Saudi Arabia had unilaterally
agreed in January to cut production in February and March.17 This decision, along with the rest of the
8OPEC+ coalition’s agreement to keep overall production almost flat for these months, aimed to suppress
supply in the face of the then renewed concerns over the Covid-19 pandemic. We noted in February that
prices had firmed further on expectations that vaccination programmes would stem the Covid-19
pandemic, aid economic recovery and, hence, boost the demand for oil (chart 5).18
Oil prices surged after OPEC+ unexpectedly agreed in early March to leave production levels unchanged in
April. Significantly, Saudi Arabia commented that it was in no hurry to bring back supply and would
maintain its 1 million barrel-a-day voluntary production cut.19 Prices hit a local peak of over $69pb (Brent
crude) by 12 March but slipped back significantly the following week on evidence of inventory build-up,
falling to around $64.5pb by 19 March.20 Nevertheless, it is clear that oil prices are now at, or above, pre-
pandemic levels.
Chart 5 Brent oil futures, $ per barrel ($pb), monthly prices (1st of month, or nearest), 1 June 2014-1
March 2021, and 19 March 2021
120
100
80
60
40
20
0
01/06/2014
01/09/2014
01/12/2014
01/03/2015
01/06/2015
01/09/2015
01/12/2015
01/03/2016
01/06/2016
01/09/2016
01/12/2016
01/03/2017
01/06/2017
01/09/2017
01/12/2017
01/03/2018
01/06/2018
01/09/2018
01/12/2018
01/03/2019
01/06/2019
01/09/2019
01/12/2019
01/03/2020
01/06/2020
01/09/2020
01/12/2020
01/03/2021
Brent futures ($pb)
Sources: Brent crude historical prices, www.uk.investing.com; BBC website 1 January-1 March 2021. 19
March from www.uk.investing.com.
Brexit update
The Government has recently extended certain dates for border checks.
Firstly, concerning border checks on Northern Ireland “imports” of goods from Great Britain (Northern
Ireland has remained in the Single Market). A 3-month grace period after the end of the transition period
(31 December 2020) was initially agreed for food “imports” from GB (with some meat products given a 6-
month grace period). This concession primarily applied to imports by NI supermarkets and their suppliers.
On 3 March 2021 the Secretary of State for Northern Ireland unilaterally announced that the current grace
periods would be extended until “at least 1 October 2021”.21-22 In addition, on 4 March the
HMRC unilaterally announced that its “temporary approach to applying declaration requirements for the
movement of goods in parcels” from GB to NI would be extended to 1 October 2021 (from 1 April 2021).
HMRC stated “in almost all cases, goods sent to consumers will not require a customs declaration.”23
On 15 March 2021, the European Commission sent a letter of formal notice to the UK saying these
unilateral actions breached substantive provisions of the Northern Ireland Protocol as well as the good faith
obligation under the Withdrawal Agreement.24-25
Secondly, concerning border checks for GB imports from the EU, grace periods have also been agreed.
(There have been no such arrangements for GB exports to the EU, full EU border controls have applied on
GB goods going to the EU since 1 January 2021.) Initially it was agreed that certain declarations and checks
9would be imposed on some goods imports from the EU (most notably food products of animal origin) from
1 April 2021, and products of animal origin would have to enter through designated border control posts
from 1 July.26
However, on 11 March Chancellor of the Duchy of Lancaster Michael Gove announced extensions to the
grace periods. The following arrangements are included in the new timetable: importers of animal products
will have to pre-notify officials from 1 October (instead of April); safety and security declarations on
imports will be pushed back from July to January 2022; and checks on live animals and low-risk plant
products will take place from March 2022.27
10References
1. Bank of England, “Monetary policy summary and minutes of the MPC meeting ending 17 March 2021”,
18 March 2021.
2. BBC, “UK economy to recover to pre-Covid levels this year, says Bailey”, 15 March 2021.
3. BBC, “Economic outlook “unusually uncertain” despite “rapid” vaccine rollout”, 18 March 2021.
4. Federal Reserve issues FOMC statement, 17 March 2021.
5. Federal Reserve, “Transcript of Chair Powell’s Press Conference”, 17 March 2021.
6. Federal Reserve, “Projections materials: accessible version”, 17 March 2021, relating to the summary of
economic projections (SEP).
7. Ruth Lea, “The economic background to next week’s MPC meeting: fall in January’s GDP less-than-
expected”, Arbuthnot Banking Group, 15 March 2021, discussed the $1.9tn package.
8. BBC, “Fed relaxes inflation target in policy shift”, 27 August 2020.
9. ONS, “Public sector finances: February 2020”, 19 March 2021.
10. OBR, Economic and fiscal outlook, March 2021.
11. OBR, Economic and fiscal outlook, March 2021.
12. Ruth Lea, “A Budget of two halves: a big boost for FY2021, but large tax increases pencilled in for
FY2023, FY2024 and FY2025”, Arbuthnot Banking Group, 8 March 2021, discussed the Treasury’s latest
approach to fiscal targets.
13. ONS, “Public sector finances: February 2020”, 19 March 2021.
14. Note that the GDP denominator for each observation of the debt ratio represents 12 months (6 months
before the said end-month and 6 months after the said end-month). For example, GDP for 2020Q1-
2020Q4 was the denominator for the PSND at end-June 2020 (end-2020Q2).
15. Financial Centre Futures, “The Global Financial Centres Index (GFCI)”, number 29, March 2021.
16. CityAM, “London remains Europe’s major global finance centre despite Brexit hit”, 17 March 2021.
17. Ruth Lea, “A double dip recession looms, as lockdown restricts economic activity”, Arbuthnot Banking
Group, 18 January 2021.
18. Ruth Lea, “GDP falls nearly 10% in 2020 but, after first quarter weakness, should recover well in 2021”,
Arbuthnot Banking Group, 15 February 2021.
19. Bloomberg, “Oil jumps after OPEC+ surprises market with unchanged output”, 4 March 2021.
20. OilPrice.com, “Oil prices inch lower as crude inventories continue to build”, 17 March 2021.
21. The Grocer, “Northern Ireland border checks to be phased in from October as tensions with the EU
grow”, 3 March 2021.
22. BBC, “Brexit: What is the Northern Ireland Protocol and why are there checks?”, 15 March 2021.
23. HMRC, “Sending parcels to and from Northern Ireland”, 4 March 2021.
24. European Commission, “Withdrawal Agreement: Commission sends letter of formal notice to the UK for
breach of its obligations under the Protocol on Ireland and Northern Ireland”, 15 March 2021.
25. BBC, “Brexit: EU to begin legal action over alleged NI Protocol breach”, 16 March 2021, commented
that the UK had unilaterally extended the grace periods for food, parcels and pets and had “unilaterally
moved to ease the trade in horticultural products from GB to NI.”
26. BBC, “Brexit: what will happen when EU-GB grace periods expire?”, 10 March 2021.
27. BBC, “Brexit: UK delays border checks on EU goods into Great Britain”, 12 March 2021.
11Annex
Table 1 Federal Reserve: economic projections December 2020, March 2021, median estimates
2021 2022 2023 Longer-run
GDP % change, Q4 (YOY):
Dec 2020 4.2 3.2 2.4 1.8
Mar 2021 6.5 3.3 2.2 1.8
Unemployment rate, Q4 (%):
Dec 2020 5.0 4.2 3.7 4.1
Mar 2021 4.5 3.9 3.5 4.0
PCE inflation (%), Q4 (YOY):
Dec 2020 1.8 1.9 2.0 2.0
Mar 2021 2.4 2.0 2.1 2.0
Core PCE inflation (%), Q4 (YOY):
Dec 2020 1.8 1.9 2.0 Na
Mar 2021 2.2 2.0 2.1 Na
Projected appropriate policy path,
Federal funds rate (%), end-year:
Dec 2020 0.1% (0- 0.1% (0- 0.1% (0- 2.5%
0.25%) 0.25%) 0.25%)
Mar 2021 0.1% (0- 0.1% (0- 0.1% (0- 2.5%
0.25%) 0.25%) 0.25%)
Source: FOMC, “FOMC projections materials”, 17 March 2021. PCE = personal consumption expenditures,
core excludes food & energy. The Federal funds rate is the midpoint of the targeted range. These are the
economic projections of Federal Reserve Board members & Federal Reserve Bank presidents under their
individual assessments of projected appropriate monetary policy.
Table 2a CJRS, SEISS and other schemes
Total number of jobs Total number of Total value of claims
furloughed employers made
(cumulative) furloughing
CJRS (as of 15 Feb) 11.2mn 1.3mn £53.8bn
Total number of … Total value of claims
claims made made
SEISS, tranche 1 (as of 19 2.7mn … £7.8bn
July), no further updates
SEISS, tranche 2 (as of 15 2.4mn … £5.9bn
Nov), no further updates
SEISS, tranche 3 (as of 31 2.2mn … £6.2bn
Jan)
Total/cumulative
amount of VAT
deferred
VAT payments deferral … … £33.5bn
scheme (as of 30 June)
12Source: HM Government, “HMRC coronavirus (COVID-19) statistics”, updated 25 February 2021.
Table 2b Business loan schemes
Scheme (as of Value of facilities Number of facilities Total number of
21 Feb) approved approved (approval rate in applications
brackets)
CBILS £22.0bn 92,449 (43.1%) 214,513
CLBILS £5.3bn 705 (63.4%) 1,112
BBLS £45.6bn 1,500,466 (74.9%) 2,004,447
Source: HM Government, “HM Treasury coronavirus (COVID-19) business loan scheme statistics”, updated
25 February 2021.
Table 3 Global Financial Centres Index, ratings of financial centres (Sep 2019-Mar 2021), rankings in
brackets for top 30 (as of Mar 2021)
Sep 2019, Mar 2020, Sep 2020, Mar Mar
GFCI26 GFCI27 GFCI28 2021, 2021,
GFCI29 Europe
Top 30
New York 790 (1) 769 (1) 770 (1) 764 (1)
London 773 (2) 742 (2) 766 (2) 743 (2) 1
Shanghai 761 (5) 740 (4) 748 (3) 742 (3)
Hong Kong 771 (3) 737 (6) 743 (5) 741 (4)
Singapore 762 (4) 738 (5) 742 (6) 740 (5)
Beijing 748 (7) 734 (7) 741 (7) 737 (6)
Tokyo 757 (6) 741 (3) 747 (4) 736 (7)
Shenzhen 739 (9) 722 (11) 732 (9) 731 (8)
Frankfurt 733 (15) 720 (13) 715 (16) 727 (9) 2
Zurich 734 (14) 719 (14) 724 (10) 720 (10) 3
Vancouver 710 (24) 711 (22) 698 (24) 719 (11)
San Francisco 736 (12) 732 (8) 738 (8) 718 (12)
Los Angeles 735 (13) 723 (10) 720 (11) 716 (13)
Washington DC 702 (28) 709 (24) 712 (19) 715 (14)
Chicago 732 (16) 717 (16) 711 (20) 714 (15)
Seoul 677 (36) 694 (33) 695 (25) 713 (16)
Luxembourg 708 (25) 715 (18) 719 (12) 712 (17) 4
Sydney 738 (10 713 (20) 682 (32) 711 (18)
Dubai 740 (8) 721 (12) 714 (17) 710 (19)
Geneva 706 (26) 729 (9) 717 (14) 709 (20) 5
Edinburgh 701 (29) 716 (17) 718 (13) 708 (21) 6
Guangzhou 711 (23) 714 (19) 710 (21) 706 (22)
Melbourne 720 (19) 712 (21) 693 (27) 705 (23)
Boston 727 (18) 708 (25) 716 (15) 703 (24)
Paris 728 (17) 718 (15) 713 (18) 699 (25) 7
Milan 655 (48) 679 (42) 670 (38) 698 (26) 8
Montreal 716 (20) 704 (26) 694 (26) 696 (27)
Amsterdam 675 (37) 703 (27) 701 (22) 695 (28) 9
Toronto 737 (11) 710 (23) 684 (31) 694 (29)
Stuttgart 663 (42) 696 (32) 672 (37) 672 (30) 10
Sources: Financial Centre Futures, “Global Financial Centres Index reports”, numbers 26-29.
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