Money

When Rishi Sunak laid out his five pledges at the start of the year, his first and most prominent one was to halve inflation in 2023. A few weeks on: how’s that going?    This morning’s inflation figures would suggest not so well. Inflation fell in the 12 months leading up to December 2022 to 10.5 per cent, down from 10.7 per cent in November. So prices are moving in the right direction, but at a snail’s pace. Ross Clark has the details here, where he highlights how the rising cost of food and domestic services is cancelling out falling energy prices. Inflation is still projected to fall significantly by the time

Economic optimism is in short supply these days – but has pessimism about the UK’s economy been overegged by the likes of Sadiq Khan? The verdict of chief executives from around the world suggests as much: Britain has been ranked in the top three markets for investment, according to PricewaterhouseCoopers’s (PwC’s) annual Global CEO Survey. Today’s report follows the latest growth update that revealed that the economy did not contract in November as had been widely predicted, but grew slightly by 0.1 per cent. It marks a sharp contrast from the recent warnings of the London mayor, who said that ‘Brexit isn’t working’. The survey, timed to be published as the business

The political and financial elite are gathered in Davos in Switzerland for the World Economic Forum’s (WEF) annual meeting, which starts today. Yet before the conference has even kicked off, the narrative around it has already been crafted: the WEF will have to pivot away from the free-market and globalist outlook Davos usually promotes, and switch its focus to inequality instead. In a cost-of-living crisis, images of the glamorous Swiss resort and delegates quaffing champagne are not a good look.  This problem was pre-empted by many. Neither Rishi Sunak nor his chancellor Jeremy Hunt will be attending this year’s conference (trade secretary Kemi Badenoch and business secretary Grant Shapps will

Whatever happened to the economic boom that was supposed to follow the Covid pandemic? The 2020s, some argued, would be like the 1920s, with an economy roaring its way out of recession, to be remembered as a time of unprecedented wealth and opportunity. That is not how things have turned out so far.  While economic growth in the UK during 2022 is still likely to come out positive, the growth was concentrated in the first half of the year – in the third quarter GDP fell by 0.3 per cent. The economy, according to the Office of National Statistics, is now 0.8 per cent smaller than it was on the eve of

Britain’s ageing health infrastructure comes close to breaking point every winter, but this year something is going to give way. On top of the usual litany of complaints about funding and increasing demand on the NHS from an older population, we can add covid backlogs, waiting times stretching into multiples of nominal targets – and now even the workforce downing tools and walking out. As usual, the government is going to try to keep things functioning with short-term sticking plasters. There will probably be more millions shovelled onto the ever-burning furnace of the NHS budget, with little to show in terms of patient outcomes. There will, at some point, be

There is no Christmas story like A Christmas Carol, and few seasonal characters as iconic as Ebenezer Scrooge; the ‘clutching, covetous old sinner’ who finds redemption in the abandonment of sound business sense and the joy of Christmas cheer. Scrooge’s name has become a byword for miserly conduct, with Jeremy Hunt the latest to claim the mantle as he raised taxes last month. But this depiction of Scrooge as Mr Bah Humbug is deeply unfair. He deserves better. For economists like me, there is much to admire about Scrooge the moneylender, who did rather more for human welfare than the late-in-the-day Scrooge filled with the spirit of Christmas. Even Dickens concedes

Economic growth is the third quarter was known to be depressed, but the Office for National Statistics (ONS) has this morning upped its estimate of the retreat in GDP for the third quarter, from a fall of 0.2 per cent to a drop of 0.3 per cent. That need not be too alarming in itself – September was always going to be a difficult month owing to the period of mourning for the Queen and the extra bank holiday for her funeral. The ONS has already reported its first estimate that growth in October rebounded by 0.5 per cent. But it is the detail which is more concerning. While the

Has inflation peaked? The Consumer Prices Index fell to 10.7 per cent last month, down from 11.1 per cent in October. This follows predictions that October would be the month in which inflation peaked – so this morning’s figures from the Office for National Statistics will raise hopes that the worst may be behind us. This doesn’t appear to be a blip. The market expects this to continue for the next two years before bottoming out in 2025. There will be optimism, too, that we can look forward to a sharp fall in the CPI over the next few months as the surge in energy prices begins to drop out of

Is unemployment beginning to bite? Or are the workless trying to rejoin the economy? That’s the key question after the unemployment rate rose to 3.7 per cent today.  Figures released by the Office for National Statistics this morning reveal that even though unemployment is up, ‘economic inactivity’ is starting to fall, having previously grown by some 565,000 people since the pandemic and lockdowns. A city of workers the size of Manchester had stopped working and weren’t looking for jobs either, meaning they weren’t counted in the official unemployment figures. But this trend away from work might be beginning to reverse.  The number of people who are economically inactive has now

Have the prospects of a recession been overstated? That would be the most optimistic reading of this morning’s update from the Office for National Statistics, which released the latest set of monthly GDP data showing 0.5 per cent growth in October. This is the biggest monthly rise since January, when the economy was bouncing back from a voluntary slowdown in activity when the Omicron variant of Covid hit last Christmas. Unfortunately, a breakdown of the data waters down that optimism. October’s 0.5 per cent growth followed a 0.6 per cent contraction in September, half of which the ONS thinks was directly linked to the bank holiday added to the calendar

Rishi Sunak’s government is trying to strike a difficult balance when it comes to discussing economic growth. On the one hand, there is broad consensus that the Liz Truss days (literally… just days) had to be dismantled to regain trust with the markets and retain the UK’s ability to keep borrowing at a stable price. On the other hand, there is recognition among ministers that the only way out of this high-tax spiral is to spur on some economic growth. In other words: achieve Truss’s goal while avoiding the many mistakes she made in her attempts to get there. It’s in this context that we should look at today’s major

This morning’s economic update from the Confederation of British Industry doesn’t make for cheery reading – but it could be worse. The organisation forecasts that the combination of high prices and low business investment will see the UK in recession throughout next year. Having previously predicted a 1 per cent rise in GDP next year, the CBI now expects a 0.4 per cent contraction. Meanwhile, the organisation’s economists expect average inflation over the course of the year to be more than three times the Bank of England’s target of 2 per cent. It’s by no means good news – but compared with other recent forecasts for the UK economy, it’s

Emmanuel Macron’s state visit to Washington this week and the upcoming meeting of the US-EU Trade and Technology Council on Monday are important tests of whether the western world can avoid a return of destructive beggar-thy-neighbour policies which already once destroyed the global trading system in the 1930s.  The most recent point of contention centres on the American Inflation Reduction Act’s provisions aimed at supporting US manufacturers of electric vehicles, to the exclusion of European ones. While at a joint press conference with his French counterpart, the US President Biden vowed to fix the ‘glitch’ in his signature piece of legislation. But doing so remains a tall order, particularly with

The US entered recession earlier than the UK and Europe, and suffered its inflation surge earlier too, so it was always likely that its economy would recover earlier. But is the US emerging from recession while Europe and the UK are still plunging into theirs? That’s what today’s data from the Bureau of Economic Analysis suggests. Real US GDP grew in the third quarter of the year by 0.3 per cent, making for an annualised rate of 2.9 per cent. The figure was negative for the first two quarters of 2022, shrinking by an annualised rate of 0.6 per cent in the second quarter. By contrast, the UK economy shrank

Andrew Bailey this afternoon showed that those who start fights don’t necessarily finish them. Speaking as the only witness at the House of Lords Economic Affairs Committee today, the Governor of the Bank of England landed some rather extraordinary accusations against Liz Truss and Kwasi Kwarteng, suggesting that he was not informed of the details in September’s mini-Budget and that he ‘does not think it was settled’ even the day before it was announced. According to Bailey, both the Monetary Policy Committee and the Treasury officials who were briefing the Bank were forced to speculate about what was coming: ‘There was speculation that this was going to be quite a

The OECD has marked Britain down as the only G7 country (and the only major country bar Russia) expected to suffer a shrinking economy next year. But how accurate are its predictions? A year ago, it predicted that inflation in the UK would peak at 4.9 per cent in the first half of this year before falling back to 2 per cent by the end of next year. The economy was going to grow by 4.7 per cent this year followed by a further 2.1 per cent in 2023. The government would bite off any hand that offered that now. It can be excused for failing to predict the Russian invasion

A year ago Boris Johnson lost his place in his speech to the CBI annual conference. He started blathering on about Peppa Pig World, after having treated young Wilfred to a day out there the day before. It was excruciating, but at least it was fun. It is hard to say the same about Rishi Sunak’s address to the CBI this morning.  The CBI ought to be a natural habitat for Sunak, yet he didn’t seem entirely comfortable. His voice seemed a tone higher than normal, so his usual enthusiasm sounded something more like a desperate appeal. He wanted us to know that innovation is a good thing which improves