BANK OF ENGLAND PREPARED TO ACT IF HOUSE PRICE INFLATION CONTINUES

The Bank of England (BoE) is monitoring Britain's house prices amid concerns that a rapid recovery from the pandemic will lead to a sustained period of inflation (The Guardian). BoE Deputy Governor for Markets and Banking Sir Dave Ramsden said that he expected high prices to be temporary but there is a risk that "demand gets ahead of supply and that will lead to a more generalised pickup in inflationary pressure?.

Sir Dave said the BoE would not be complacent about inflation. He added "If it is not temporary we know what to do about that. We can push the bank rate up from its historically low level (0.1 per cent) and we know what that will do to demand." The deputy governor also said he is optimistic about recovery, and there is a possibility that inflation may be lower than expected if the economy slows after an initial burst of post-lockdown activity.

Separately, BBC News reports that UK house prices soared 10.9 per cent in the year to May, according to Nationwide. The increase is the highest level in seven years, with the average house price now £242,832, up £23,930 over the past twelve months. Nationwide said buyers are in a "race for space" as they seek larger homes and properties with gardens.

OECD PREDICTS FAST ECONOMIC REBOUND FOR BRITAIN

The Organisation for Economic Co-operation and Development (OECD) has said the global economy will return to pre-pandemic levels by 2022 (Financial Times, £). The organisation said global output would rise 5.8 per cent this year, a significant update from its December forecast of 4.2 per cent. However, the forecast also warned that recovery will be uneven, with a larger shortfall in emerging markets.

The OECD predicts that Britain's economy will outpace many others this year, with GDP set to grow 7.2 per cent (The Telegraph). The OECD said Britain's vaccination programme means that "services sectors are braced for take-off" and "consumption will bounce back sharply as hard-hit hospitality services and retail trade reopen". British business investment is also set to accelerate in 2022 as uncertainty falls, and household saving is forecast to return to pre-crisis levels as opportunities to spend return.

NEWS IN BRIEF

Business leaders have warned MPs about ending free workplace coronavirus tests, with companies insisting they are vital to plans to fully reopen the economy later this month (Financial Times, £).

UK services exports shrank by more than £110 billion over a four-year period due to Brexit, according to Aston University (The Independent).

The EU is set to unveil plans for a bloc-wide digital wallet on Wednesday to help citizens access public and private services online (Financial Times, £).

Imports from high-polluting countries could face new carbon taxes, according to the environment secretary George Eustice (The Times, £).

LATEST BLOGS

Jo Causon, CEO of the Institute of Customer Service, discusses how Covid-19 has made changes to the psychology of the customer experience.