Might Rishi Sunak be right? Has the economy finally turned a corner? Speaking on a visit to a bus depot in Harrogate yesterday, the Prime Minister admitted that while recent years have been undoubtedly difficult, he believes Britain has turned a corner and is heading in the right direction.
The PM’s optimistic claims might sound odd coming in a week when a slew of gloomy economic news is due to be published.
Tomorrow, the Office for National Statistics (ONS) will release inflation numbers for January, which are likely to show a small uptick. On Thursday, it publishes GDP figures for the end of last year, which will not make for happy reading.
Economists reckon growth shrunk by 0.3 per cent in December, suggesting the economy will have contracted 0.1 per cent across the fourth quarter.
The fall in the final quarter of last year comes after a 0.1 per cent fall in the third quarter – a technical recession.
All aboard: Prime Minister Rishi Sunak said he believed the UK had turned a corner during his visit to a bus depot in Harrogate
At best, the figures will show the economy stagnated, hit by the combination of strike action on the health and rail industries as well as stormy weather keeping more people at home. And it comes as no surprise.
The already published retail sales for December showed a whopping 3.2 per cent drop, the sharpest fall since January 2021.
Yet the Prime Minister may have a point, that the worst is over.
It is true that inflation will have risen slightly again in January after December’s surprise rise to 4 per cent. But the trajectory is definitely down. Even Bank of England governor Andrew Bailey agrees on that one.
The mood is also brighter on the consumer front. Wages are rising and the latest cut in National Insurance will feed through into household pockets.
Indeed, retail sales data, out on Friday, will show decent growth of 1.5 per cent in January after December’s bombshell.
Recent business surveys also confirm activity picking up since the start of the year, a mood born out by the number of mergers and corporate deals now being reported.
Private sector output has risen now for three months in a row and at a faster rate than predicted. And it is across most of the country.
Leaving aside any more geopolitical hiccups – or black swans – the first cut in interest rates will come in May with another two or so cuts ahead of the autumn. About time too. Monetary policy is already far too tight.
Sunak may be right about turning the corner but it is too late to save his government from what is likely to be a bloodbath on Thursday in the two by-elections.
Which makes it all the more essential that Jeremy Hunt goes ahead with serious tax cuts in next month’s Budget, still the most efficient way to lift spirits and get the country’s mojo properly back on track.
No wonder the car park at my local railway station, Audley End on the Cambridge-to-Liverpool Street line, is almost back to pre-pandemic levels.
The many bankers and lawyers living in the district are finally escaping from their garden offices and hot-footing it to the City to work on the myriad of deals that are emerging. Nothing like fat fees to get City folk on the move.
Private equity is buzzing around Liverpool-based Very Group. It is part of the unwinding of the Barclay brothers empire and they are said to want more than £4billion. That looks pricey enough considering the debt levels.
And there maybe a new contender for the FTSE 100 if Tritax Big Box and UK Commercial Property go through with their merger, creating the UK’s fourth biggest real estate investment trust.
Another sign that people are on the move again is the swoop by Upper Crust-owner, SSP Group, on an Aussie-based airport food retailer.
SSP runs 2,800 catering and retail units in 180 airports and 300 railway stations and wants to expand even further into Asia. That is a pretty accurate indicator of what is happening on the ground and in the air.
On your Tod
Tod’s has had a rough patch recently, maybe because you need a mortgage to buy it’s admittedly gorgeous loafers.
The majority family-owned business has decided that coming off the Milan Stock Exchange is the best option.
Like the London stock exchange, Milan has suffered from several delistings recently as companies either go private or relocate.
Once again Bernard Arnault’s LVMH comes up trumps. He has a stake and his investment arm is funding the deal. He must be a shoe-in for taking control.