The shape of things to come - February 2021 Philip Bartlett, Economist - The Shape of Things to Come ...
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The shape of things to come February 2021 Philip Bartlett, Economist Information classification: Public
One giant leap into the unknown
Monthly GDP, UK and Scotland (2018-2020)
100
-6.5%
95
GDP (Jan 2020 = 100)
90
85
80
75
70
Jan-18 Jun-18 Nov-18 Apr-19 Sep-19 Feb-20 Jul-20 Dec-20
UK Scotland
2 Information classification: Public Source: ONS, Scottish Govt
Huge sectoral imbalances persist, but signs of
adaptation Change in GDP by sector, Scotland
GDP change vs. Jan 2020 (%)
-5%
-25%
-45%
-65%
-85% Latest (Nov) Trough
3 Information classification: Public Source: Scottish Govt
Many businesses are under immense pressure…
Corporate borrowing, by size of firm (UK) Businesses at risk of insolvency, by sector (Scotland)
50
Info & comms
Net bank borrowing, £bn
40 Professional
30
Retail & wholesale
Admin & support
20
Manufacturing
10 Construction
Transport & storage
0
Leisure
-10 Hospitality
SMEs Large firms 0% 10% 20% 30%
2019 2020 Businesses at moderate/severe risk of insolvency (%)
4 Information classification: Public Source: Bank of England, Scottish Govt
… As are their workforces
Unemployment and furlough, 1975-2020 (UK)
10,000
8,000
Individuals (thousands)
6,000
4m
4,000 furloughed
+
2,000
1.7m
unemployed
-
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Unemployed Furloughed
5 Information classification: Public Source: ONS, HMRC
100,000 more Scots are in receipt of income
replacement benefits
Claimant rate by Constituency,
December 2020
6 Information classification: Public Source: HoCUK population suffers steepest drop in living
memory as migrants depart
Annual change in UK population, 1956-2020*
1000
500
0
-500
-1000
-1500 -1.3 million
1956 1966 1976 1986 1996 2006 2016
*estimated
7 Information classification: Public Source: ESCOE, ONSHousehold savings have risen in aggregate but
accrued mostly to the better-off
Aggregate household finances, 2020 Change in household savings,
by wealth quintile
140
Change Jan-Nov 2020 (£bn)
120
100
80
60
40
20
0
-20
-40
Consumer credit Household deposits
8 Information classification: Public Source: ONS, Resolution FoundationHome working opportunities are unevenly shared
Jobs most suitable for home working, by occupation
£50
Executives
£40
Marketing
Finance
Pay per Hour
£30
IT Software
Police
£20 Plumbers
Analysts
£10
Mechanic
£0
More suitable for home working
*Size of bubble represents no. jobs
9 Information classification: Public Source: ONS, NatWest EconomicsThe young have lost out (again)
Share of jobs furloughed and average age in sector
60%
Arts, Entertainment
50% And Recreation
Accommodation
And Food Service
40%
Activities
Share furloughed
30%
20% Wholesale And
Retail Trade; Real Estate
Repair Of Motor Activities
10% Vehicles And
Motorcycles
0%
32 34 36 38 40 42 44 46
Average Age
*Size of bubble represents no. jobs furloughed
10 Information classification: Public Source: ONS, NatWest EconomicsLight at the end of the tunnel
New cases by date reported, Scotland (to 15 Feb)
Vaccine rollout, Scotland (to 15 Feb)
11 Information classification: Public Source: Scotland Coronavirus TrackerBrighter outlook for Scotland’s economy
GDP outlook and Scottish Fiscal Commission forecast
12 Information classification: Public Source: Scottish Fiscal CommissionWhat we buy has changed
Change in card spending in 2020*, by category
Shopping Groceries Eating out Personal Care Travel
+15% +8% -18% -18% -60%
Tend to be tradable Tend to be less tradable
*using card spend, October 2019 to October 2020
13 Information classification: Public Source: NatWestHow we buy has changed
Change in UK retail footfall, week to 7 Feb
70%
UK retail footfall, % of normal
60%
50%
40%
30%
20%
10%
0%
Retail parks High streets Shopping centres
14 Information classification: Public Source: NatWest, ONSHow we work has changed too
Working patterns and attitudes to work
WFH 2019 WFH today Work New Ways Firms WFH Perm*
9% 36% 68% 28%
* Large firms (250+) moving to permanent home working
15 Information classification: PublicGovernment borrowing is the highest ever seen
in peacetime…
Public sector borrowing, 1900-2020
16 Information classification: Public Source: IFS, OBR…But the cost of servicing public debt is the
lowest for >300 years
Debt interest expenditure, 1700-2020
17 Information classification: Public Source: IFSDisclaimer Security may be required. Product fees may apply. ANY PROPERTY OR ASSET USED AS SECURITY MAY BE REPOSSESSED OR FORFEITED IF YOU DO NOT KEEP UP ON REPAYMENTS ON ANY DEBT SECURED ON IT This document has been prepared by The Royal Bank of Scotland plc or an affiliated entity (“RBS”) exclusively for internal consideration by the recipient (the “Recipient” or “you”) for information purposes only. This document is incomplete without reference to, and should be viewed solely in conjunction with, any oral briefing provided by RBS. RBS and its affiliates, connected companies, employees or clients may have an interest in financial instruments of the type described in this document and/or in related financial instruments. Such interests may include dealing in, trading, holding or acting as market-maker in such instruments and may include providing banking, credit and other financial services to any company or issuer of securities or financial instruments referred to herein. RBS is not and shall not be obliged to update or correct any information contained in this document. This document is provided for discussion purposes only and its content should not be treated as advice of any kind. This document does not constitute an offer or invitation to enter into any engagement or transaction or an offer or invitation for the sale, purchase, exchange or transfer of any securities or a recommendation to enter into any transaction, and is not intended to form the basis of any investment decision. This material does not take into account the particular investment objectives, financial conditions, or needs of individual clients. RBS will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does RBS owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on RBS for investment advice or recommendations of any sort. Neither this document nor our analyses are, nor purport to be, appraisals or valuations of the assets, securities or business(es) of the Recipient or any transaction counterparty. RBS makes no representation, warranty, undertaking or assurance of any kind (express or implied) with respect to the adequacy, accuracy, completeness or reasonableness of this document, and disclaims all liability for any use you, your affiliates, connected companies, employees, or your advisers make of it. Any views expressed in this document (including statements or forecasts) constitute the judgment of RBS as of the date given and are subject to change without notice. RBS does not undertake to update this document or determine the accuracy or reasonableness of information or assumptions contained herein. RBS accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However, this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed. The information in this document is confidential and proprietary to RBS and is intended for use only by you and should not be reproduced, distributed or disclosed (in whole or in part) to any other person without our prior written consent. The Royal Bank of Scotland plc. Registered in Scotland No. SC083026. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. The Royal Bank of Scotland plc is authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. National Westminster Bank Plc. Registered in England & Wales No. 929027. Registered Office: 250 Bishopsgate, London EC2M 4AA. National Westminster Bank Plc is authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The Royal Bank of Scotland plc and National Westminster Bank Plc are authorised to act as agent for each other. 18 Information classification: Public
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