Economy

The best thing that can be said about global economic growth prospects for 2023 is that no-one is expecting very much. On that basis, hopefully, things can only get better. Over the weekend, International Monetary Fund (IMF) managing director Kristalina Georgieva said that she expects a third of the globe to be in recession, including half of the EU. That doesn’t sound too bad on the face of it. If the IMF’s predictions proved to be accurate – and the record of economic forecasting is pretty dire – it would still mean that the economy was still growing in two thirds of world. We might, yet, avert global recession. But

Unforeseen events which provoke global crises – such as Covid — have come to be known as ‘black swans’. By the same token, the end of 2022 has just been visited by a great big fluffy white swan.     Over the past 24 hours the main benchmark for European gas futures – the Dutch Title Transfer Facility (TTF), for gas to be delivered in February – has crashed below 80 Euros per MWh, taking it below the level it was on 23 February, the day before Russia invaded Ukraine. This, in the dead of a winter which we have been warned many times could see Europe’s shivering masses rioting in response

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

After a faltering start in its programme of rate rises, the Bank of England is catching up. Today’s half-point rise in its base rate to 3.5 per cent may be relatively modest compared with last month’s 0.75 per cent rise, but it is still twice as high as any rise the Monetary Policy Committee (MPC) was prepared to inflict on the economy during the first quarter-century of its existence. The MPC has turned itself into a prisoner of the markets – if it does anything unexpected, there is likely to be trouble In the space of three months rates have now been jacked up by 1.75 per cent. That is

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

Half a century ago this week, I left school in Scotland and travelled to Worcester College, Oxford for an interview to read politics, philosophy and economics. I can still picture the trio of scary dons who quizzed me: the grumpy political historian ‘Copper’ LeMay; the deeply obscure philosopher Michael Hinton; and Dick Smethurst, a jovial left-leaning economist, in and out of Downing Street in Harold Wilson’s years, later a popular provost of the college. It was Smethurst who kicked off with ‘What makes you mad?’, to which I gave the 1972 equivalent of a full-woke answer about human injustice – though the truth, then and now, is that I’m rarely

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

Will a price cap on Russian oil sales be a winning move in the Ukraine war? Since the invasion began, Russia has continued exporting crude and refined oil products at barely less than pre-war volumes and at rising prices that have replenished Putin’s coffers. From this week, however, the EU and G7 have imposed a ban on seaborne Russian crude imports and a $60-per-barrel price cap to be enforced by banning western shipping and insurance firms from handling Russian shipments sold above the price cap. But as I write, $60 is actually the market price of Urals crude – which has lately been trading at 25 per cent below Brent

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

And so it begins. French energy company TotalEnergies SE has become the first out of the gate to announce a change of plans for investment directly linked to the energy profits levy brought in by Rishi Sunak this spring, and expanded by Jeremy Hunt. The company says it will cut back its investment plan by 25 per cent next year, which will see roughly £100 million directed elsewhere. While this is one of the first companies to officially announce investment changes in the North Sea due to the windfall tax, it may not be the last. Shell is making similar noises; the company, so far, has used a loophole which