You might be forgiven for thinking that the UK’s economy has slid off a cliff, and we’re all heading for Hell, writes David Little, a partner in our Corporate and Commercial Law team.
But wait, as the Office of National Statistics reported, between October and December last year the UK avoided falling into recession in 2022, after the economy saw zero growth between October and December. This is despite the 0.5% fall in economic output during December, due to over one million workers taking strike action.
The International Monetary Fund reversed it’s gloomy prognosis for the UK: “The UK economy’s actually done relatively well last year. We have revised upwards economic growth in the UK to 4.1 percent. That’s a 0.5 percentage point revision. And it’s one of the highest growth rates in Europe in that region for that year.”
Contrast this with CNBC reporting a week later, “The U.K. economic contraction of 2023 will be almost as deep as that of Russia, economists expect, as a sharp fall in household living standards weighs on activity.
“In its 2023 macro outlook, Goldman Sachs forecasts a 1.2% contraction in U.K. real GDP over the course of this year, well below all other G10 (Group of Ten) major economies. This is set to be followed by a 0.9% expansion in 2024, the lender anticipates.” This sets us only above Russia amongst our peers.
Well, they won’t both be right. Perhaps politics is at play?
The centre left think tank, the Institute of Public Policy Research tweeted, “Unlike other countries which have returned to post-pandemic growth, the British economy is stagnating, and it will be the living standards of ordinary families that suffer.”
The Bank of England has projected that the U.K. economy will experience at least a four-quarter recession, its longest on record. Well, as readers of my previous columns may recall, I suggested the BoE has one central job to do – keep inflation down – and hasn’t that gone well.
Stock exchange record
Against this gloomy news why is the FTSE 100 closing in on 8,000, having this week reached its record peak – and where could it peak in 2023? I won’t spoil the interesting analysis about this here in the Proactive Investors blog.
But is does make you think. Are we really heading for recession? For once I’m beginning to think the Conservatives and Labour party are on the same side, but for different reasons. The Opposition want to take over, so are encouraged by stories the UK’s economy is doomed. The Conservatives on the other hand will benefit immeasurably, if after all the gloomy news the Chancellor can miraculously raise up the nose of the economy and swoop upwards, towards (an unlikely) general election victory.
We’ve been here before. But rarely can I recall a moment when it was in both political parties’ interests to say the economy isn’t well.
David Little is a Partner at Bishop & Sewell in our expert Corporate & Commercial team. If you would like to contact him, please quote Ref CB380 on either 020 7631 4141 or email email@example.com.
The above is accurate as at 13 February 2023. The information above may be subject to change during these ever-changing times. The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.