25 minutes ago
The British economy in figures
The UK economy stagnated in the last quarter of 2022 to narrowly avoid entering a technical recession, but suffered a sharp slump in December.
The latest data showed that the economy grew 0.3% annually in January, beating expectations.
Alongside Hunt’s autumn statement, the independent Office for Budget Responsibility forecast that UK households would experience the sharpest decline in living standards on record amid persistently high food and energy costs and tightening financial conditions.
The OBR also forecast a five-quarter recession that would mean a 1.4% contraction in GDP in 2023.
Deutsche Bank hinted in a note last week that this is likely to be revised to a contraction of just 0.5%, in line with the Bank of England’s forecast for a flatter downturn.
Annual UK consumer price index (CPI) inflation fell to 10.1% in January from 10.5% in December, after hitting a 41-year high of 11.1% in October 2022.
The Bank of England raised its main interest rate by 50 basis points to 4% in February, but the future pace of monetary tightening remains unclear as policymakers seek to push inflation towards the bank’s 2% target.
The Monetary Policy Committee will assess Tuesday’s tight jobs data and next Wednesday’s consumer price index ahead of its interest rate decision on March 22nd.
-Elliot Smith
27 minutes ago
BNP Paribas: Fiscal credibility ‘easily lost, hard to regain’
Paul Hollingsworth, BNP Paribas’ chief European economist, noted that the Conservative government’s fiscal credibility was “easily lost and hard to regain” after 2022 became a roller-coaster ride for economic policy under four finance ministers in just 12 months.
Hunt aims to put public sector debt-to-GDP ratio on a downward trend and bring public sector net borrowing below 3% by 2027/28.
However, Prime Minister Rishi Sunak’s Conservative Party is currently more than 20 points behind the main opposition Labor party in most national opinion polls, with the next general election set for 2024.
“The improved macroeconomic environment and better-than-expected performance of public finances have brought UK Chancellor Jeremy Hunt a £25-30bn windfall,” Hollingsworth said.
“Our central case is that he’ll only give away about half of that and bank the rest for some likely reelection giveaways.”
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