Ruth Lea CBE was Arbuthnot Banking Group’s Economic Adviser from 2007 to May 2022, having been 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.



From the desk of Ruth Lea

Economic insight and financial comment related to the ever-changing financial landscape and the economic world at large.

Economic Perspectives

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Comment, at a glance

Public sector net borrowing £18.6bn in April 2022
24 May 2022

The ONS estimated that public sector net borrowing (PSNB-ex, excluding public sector banks) in April 2022 was £18.6bn, the fourth-highest April borrowing since monthly records began in 1993. This was £5.6bn less than in April 2021, but still £7.9bn more than in April 2019, pre-coronavirus pandemic.

The CGNB was £18.6bn (also) in April 2022, compared with £32.7bn in April 2021 (table PSA2):
·       CG receipts were £70.2bn in April 2022, £9.9bn more than in April 2021, of which tax receipts were £50.2bn, an increase of £5.5bn.
·       Central government current (or day-to-day) expenditure was £76.0bn in April 2022, £6.7bn less than in April 2021, with the additional £3.0bn cost of the Council Tax rebate payments being offset by reductions in other areas of expenditure, including subsidies and transfers to local government.
·       Debt interest payments were £4.4bn in April 2022 (£4.9bn in April 2021), of which the RPI uplift on index-linked gilts contributed £3.9bn over and above the accrued coupon payments and other components of debt interest.
·       Within total CG spending, net investment was £10.0bn (£7.6bn in 2021).  

The PSNB for FY2021 totalled £144.6bn, 6.1% of GDP, the third-highest FY borrowing since records began in FY1946 (FYE March 1947). The PBR forecast a PSNB for FY2022 of £99.1bn for the Spring Statement.

Concerning other key metrics:
·       Public sector net debt (excluding public sector banks, PSND ex) at end-April 2022 was £2,347.7bn or around 95.7% of gross domestic product (GDP), reaching levels not seen since the early 1960s.
·       “Underlying” public sector net debt excluding public sector banks and the Bank of England (PSND ex BoE) was £2,027.0bn at end-April 2022 or around 82.6% of GDP (table PSA1). Note that 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).

Source: ONS, “Public sector finances: April 2022”, 24 May 2022.





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Retail sales rose by 1.4% in April
20 May 2022

Retail sales volumes rose by 1.4% (MOM) in April, after a fall of 1.2% (revised) in March. Sales were 4.1% above their pre-coronavirus February 2020 levels. They were, however, 4.9% lower YOY.

Food store sales volumes rose by 2.8% in April 2022, mostly because of higher spending on alcohol and tobacco in supermarkets; supermarket food sales were broadly unchanged. Non-store retailing sales volumes, which are predominantly sales from online-only retailers, rose by 3.7% in April 2022 led by stronger clothing sales. Automotive fuel sales volumes rose by 1.4% in April 2022 following a fall of 4.2% in March when record increases in petrol prices impacted sales. Non-food stores sales volumes fell by 0.6% in April 2022 because of falls in other non-food stores (negative 3.3%) and household goods stores (negative 0.5%) such as furniture stores.

The proportion of retail sales online rose to 27.0% in April, from 25.9% in March, remaining substantially higher than the 19.9% in February 2020 before the coronavirus pandemic.

In the three months to April retail sales decreased by 0.3% (QOQ) but were 1.0% higher (YOY).

Source: ONS, “Retail sales, April 2022”, 20 May 2022.   




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house prices 9.8% annual increase in March
18 May 2022

According to official data, UK average house prices rose by 9.8% (YOY) in March, down on February’s 11.3%. The latter half of 2020 saw the UK’s average house price growth accelerating. This trend continued into 2021 and house price growth has remained strong since the start of 2022. The UK average house price for March 2022 was £278,000, £24,000 higher than in March 2021, but unchanged from the record level seen in February 2022. Prices rose by 0.3% (MOM) on a non-seasonally adjusted basis in March and rose by 0.6% (MOM) on a seasonally adjusted basis. The UK House Price Index (HPI) is based on completed housing transactions.

The inflation rates for the UK’s four countries in March were: England (9.9% YOY), Wales (11.7% YOY), Scotland (8.8% YOY), and Northern Ireland (10.4% (2022Q1, YOY)). In England, there was, as always, a significant range across the nine regions (figure 4). The complete list of annual price changes is: East Midlands (12.4%), South East (11.7%), East (10.9%), South West (10.9%), West Midlands (10.3%), North West (9.7%), Yorkshire & Humberside (9.0%), North East (8.7%), and London (4.8%). London continued to be the region with the lowest annual growth.

Source: ONS, “UK house prices index: March 2022”, 18 May 2022.

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Producer prices inflation rates were 14.0% (output) and 18.6% (input) in April
18 May 2022

The inflation rate for the output PPI (goods leaving the factory gate) picked up to 14.0% (YOY) in April, compared with 11.9% in March (table 1). This was the highest the rate has been since July 2008. Petroleum prices rose 17.4% (MOM) to be 85.1% higher YOY in April.  

The inflation rate for the input PPI (materials and fuels used in the manufacturing process) was 18.6% (YOY) in April, unchanged from March (table 3). This was the highest the rate had been since records began. Crude oil actually fell 11.5% (MOM) but was 68.4% higher YOY in April. The annual rate of inflation for imported materials and fuels slipped to 14.1% (YOY) in April, from 14.6% in March (table 4). Imported materials and fuels represent roughly two-thirds of overall materials and fuels (input prices) in terms of index weight. Note that the sterling effective exchange rate index (ERI) slipped by 0.6% (MOM) in April and was 0.1% lower YOY (table 4).

 Source: ONS, “Producer price inflation, UK: April 2022”, 18 May 2022.

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CPI inflation rate rose to 9.0% in April
18 May 2022

The Consumer Prices Index (CPI) YOY rate rose to 9.0% in April, up from March’s 7.0%. This was the highest CPI 12-month inflation rate in the National Statistics series, which began in January 1997. It was also the highest recorded rate in the constructed historical series, which began in January 1989. The ONS added that they had recently published modelled CPI inflation data on an indicative basis for earlier periods. These new estimates suggested that CPI would last have been higher sometime around 1982, when estimates range between approximately 6.5% in December to nearly 11% in January. The CPI rose by 2.5% (MOM) in April 2022, compared with a rise of 0.6% (MOM) in April 2021.

The CPIH inflation rate (YOY), the ONS’s preferred measure, rose to 7.8% in April, after March’s 6.2%. This was the highest recorded 12-month inflation rate in the National Statistics series, which began in January 2006. The rate was last higher in the constructed historic estimates in April 1991, when it stood at 8.0%. Moreover, the rise of 1.6 percentage points to 7.8% in April 2022 was the largest increase in the annual rate in the National Statistics series. It was also the largest increase in the earlier constructed series, which goes back to January 1989. The CPIH rose by 2.1% (MOM) in April 2022, compared with a 0.7% rise (MOM) in April 2021.

The largest upward contributions to the annual CPIH inflation rate in April 2022 came from housing and household services (principally from electricity, gas and other fuels, and owner occupiers’ housing costs) and transport (principally from motor fuels and second-hand cars). The energy cap increased by 54% in April 2022.

Specifically, the ONS noted that:
·       The 12-month inflation rates were 53.5% for electricity and 95.5% for gas in April.
·       Average petrol prices stood at 161.8 pence per litre in April 2022, compared with 125.5 pence per litre a year earlier. The April 2022 price was the highest recorded. The average price of diesel in April 2022, which was 176.1 pence per litre, was also the highest on record. The 12-month rate for motor fuels and lubricants was 31.4%, the highest since before the start of the constructed historical series in January 1989.
·       The prices for second hand cars were 27.0% (YOY) higher in April.  

The YOY inflation rates for goods and services in April were 12.4% (9.4% in March) and 4.7% (4.0% in March) respectively (table 4). The core rate inflation (excluding energy, food, alcoholic beverages & tobacco) rose to 6.2% (5.7% in March).

Source: ONS, “Consumer price inflation, UK: April 2022”, 18 May 2022. CPIH is the Consumer Prices Index including owner-occupiers’ housing costs and is the ONS’s preferred measure of consumer prices inflation.

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Labour productivity (output per hour) fell 0.7% (QOQ) in 2022Q1, but was 1.9% higher than pre-pandemic 2019
17 May 2022

The ONS has released its flash productivity estimates for 2022Q1 (table 1).

Firstly, output per hour (the main measure of labour productivity, “productivity hours”), fell by 0.7% (QOQ) in 2022Q1. Gross value added (GVA) rose by 0.8% (QOQ) whilst total hours worked were 1.4% (QOQ) higher. Output per hour worked was 1.9% above pre-coronavirus pandemic levels, as GVA was 0.9% higher whilst hours worked were 1.0% lower. The ONS noted that this improvement did not appear to be significantly different from that which can be projected using the 2009 to 2019 trend, suggesting that no fundamental change in productivity behaviour resulting from the coronavirus pandemic was yet visible in these data. Growth in output per hour is now led by productivity growth within industries compared with the pre-coronavirus pandemic level, rather than the fact that furlough disproportionately affected lower productivity sectors, skewing the remaining hours worked towards higher productivity sectors, which caused the average productivity of those in work to increase during the coronavirus pandemic.

Secondly, output per worker rose by 0.5% (QOQ) in 2022Q1, as GVA rose by 0.8% but employment (workers) increased by 0.3%. Output per worker was 1.6% above pre-pandemic 2019, as GVA was 0.9% above the 2019 level, whilst employment was 0.7% below. 

Table 1 Productivity measures, growth, 2022Q1




Compared with 2019 (annual average)

Output per hour 




Output per worker




Constituent data:








Hours worked (total)




Employment (workers)








Source: ONS, “Productivity flash estimate, UK, 2022Q1”, 17 May 2022. The data for GVA, hours worked and employment (workers) are from the dataset. 

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Regular annual earnings growth in real terms slips in three months to March
17 May 2022
Annual growth in average total pay (including bonuses) was 7.0%, helped by strong bonus payments, and regular pay (excluding bonuses) was 4.2% among employees for the three months to March 2022 (table 1). The ONS explained that previous months’ strong growth rates had been affected upwards by base and compositional effects, but these initial temporary factors had worked their way out of the annual comparisons. However, they added, they were now comparing the latest period with a period where certain sectors had increasing numbers of employees on furlough as a result of the winter 2020 to 2021 lockdown. Therefore, a small amount of base effect would be present for these sectors but not to the degree observed when comparing with periods at the start of the pandemic.

In real terms (inflation adjusted) total pay rose by 1.4%, but regular pay fell by 1.2% (as earnings increases were outstripped by prices increases).

Average total pay growth for the private sector was 8.2% in January to March 2022, and for the public sector was 1.6% in the same time period; the finance and business services sector showed the largest growth rate (10.7%), partly because of strong bonus payments.

Table 1 Growth in employee earnings (YOY, %), 3 months to March 2022







Total pay (including bonuses)



Regular pay (excluding bonuses)






Sources: (i) ONS, “Labour market overview: May 2022”, 17 May 2022; (ii) ONS, “Average weekly earnings in GB: May 2022”, 17 May 2022.  

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Vacancies at a record high in the three months to April
17 May 2022

UK vacancies in the three months to April rose to a new record high of 1,295k, an increase of 33,700 (QOQ) and an increase of 499,300 from pre-pandemic 2020Q1. However, the quarterly rate of growth continued to slow down – for the ninth consecutive period.  

In January to March 2022 the ratio of unemployed people to every vacancy remained at 1.0 however, for the first time, the number of vacancies was larger than the number of people unemployed. The ratio of vacancies to every 100 employee jobs reached a further record high of 4.3 in February to April 2022, with 11 of the 18 industry sectors displaying record high ratios.

Sources: (i) ONS, “Labour market overview: May 2022”, 17 May 2022; (ii) ONS, “Vacancies and jobs in the UK: May 2022”, 17 May 2022.


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The labour market remains robust
17 May 2022
The latest data suggest that the labour market remains robust. In the three months to March 2022 LFS estimates showed a decrease in the unemployment rate, an increase in the employment rate but the economic inactivity rate increased, compared with the previous three-month period (three months to December 2021).

Firstly, early estimates from Pay As You Earn Real Time Information (PAYE RTI, HMRC data) show the number of payroll employees increased by 121,000 (MOM) to a record 29.5mn in April. All age groups saw an increase in payrolled employees between April 2021 and April 2022, with an increase of 503,000 aged under 25 years. The increase in payrolled employees between April 2021 and April 2022 was largest in the accommodation and food service activities sector (a rise of 333,000 employees) and smallest in the construction sector (a rise of 3,000).

Secondly, turning to the employment data for the three months to March (LFS data):
·       Employment rose by 83,000 (QOQ) to 32.570mn and was 388,000 higher YOY.
·       The employment rate (the proportion of people aged 16-64 who were in work) was 75.7%, 0.1 percentage points higher QOQ but 0.9 percentage points higher YOY. But it was still below pre-pandemic levels. The ONS noted that the number of part-time employees increased during the latest three-month period; however, this was partially offset by a decrease in full-time employees. Since April to June 2021 part-time employees have been showing a recovery from the large falls during the coronavirus pandemic. The number of self-employed workers also fell during the pandemic and has remained low, although they have increased during the latest three-month period.
·       Total weekly hours worked increased by 14.8mn hours (QOQ) to 1,041.5mn. However, this was still 10.7mn hours below pre-pandemic levels (the three months to February 2020) despite the loosening of pandemic restrictions.

Concerning unemployment and redundancies in the three months to March (LFS data):
·       Unemployment fell by 118,000 (QOQ) to 1.257mn and was 396,000 lower YOY. Unemployment measures people without a job who have been actively seeking work within the last four weeks and are available to start work within the next two weeks.
·       The unemployment rate (the proportion of the labour force that were unemployed, aged 16+) was 3.7%, 0.3 percentage points lower QOQ and 1.2 percentage points down YOY.
·       The inactivity rate (the proportion of people aged 16-64 who were economically inactive) was 21.4%, 0.1 percentage points higher (QOQ) but flat YOY. And it was 1.1 percentage points higher than pre-pandemic 3 months to February 2020. Recent increases in economic inactivity have been driven by those aged 50 to 64 years.
·       The number of redundancies fell by 2,000 (QOQ) to 70,000 and was 81,000 down YOY.

Sources: (i) ONS, “Labour market overview: May 2022”, 17 May 2022; (ii) ONS, “Earnings and employment from Pay As You Earn Real Time Information, UK, May 2022”, 17 May 2022; (iii) ONS, “Employment in the UK: May 2022”, 17 May 2022. The unemployment rate can also be defined as the proportion of the economically active population (those in work plus those seeking and available to work) who are unemployed.

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Total trade (goods & services) deficit of £11.6bn in March
12 May 2022

The total trade (goods & services, including precious metals) deficit worsened to £11.6bn in March 2022 compared with a deficit of £9.2bn in February (table 1). Concerning the components (including precious metals):

·       The visible (goods) deficit widened to £23.9bn (from £21.6bn in February), as exports rose by 2.1% (MOM) and imports increased by 5.8%. Both the EU and non-EU balances worsened:

o   The deficit with the EU widened to £10.1bn (from £8.5bn) (table 2). 

o   The deficit with non-EU countries widened a tad to £13.8bn (from £13.1bn) (table 2). The ONS commented that imports of fuels from non-EU countries increased by £1.5bn in March 2022, primarily because of increasing natural gas imports from Norway. This increase was driven by further fuel price increases in early March, which can likely be attributed in part to the Russian invasion of Ukraine. Imports of fuels from Russia fell in March for the third consecutive month with economic sanctions being imposed from 1 March 2022 onwards.

·       Concerning services, the surplus was little changed at £12.3bn (from £12.4bn in February), as exports rose by 0.4% (MOM), whilst imports increased by 1.2%.

The deficit on precious metals narrowed to £1.5bn in March, down from February’s £3.0bn (tables 9 and 10). Excluding precious metals, the total trade deficit worsened £10.0bn, compared with a £6.2bn in February (table 9).   

The ONS commented that caution should be taken when interpreting these data as HM Revenue and Customs changed the collection methods for EU trade from January 2022.


Source: ONS, “UK trade: March 2022”, 12 May 2022.




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