Jeremy Hunt struck an upbeat tone following the publication of the newest financial progress information for February.
“The economic outlook is looking brighter than expected – GDP grew in the three months to February and we are set to avoid recession,” he mentioned.
In some respects he is proper.
Even although the nation was deep right into a winter power disaster, Britain averted a recession in the direction of the top of final 12 months.
Follow stay – Growth flatlining and IMF has issued stark warning about UK, however chancellor constructive
The economic system confounded expectations once more in January to eke out progress of 0%.
At 0%, February’s efficiency was a little bit weaker than anticipated however the economic system has been in constructive territory for the previous three months.
However, there is not an enormous quantity to have fun.
While the economic system has proved extra resilient than some feared, this does not change the general image, which is one in all financial stagnation.
In February, the nation was held again by industrial motion of lecturers, civil servants and healthcare staff, which weighed on public sector output.
Output within the schooling sector dropped by 1.7% month-to-month, subtracting 0.10 proportion factors from progress in GDP.
In the general public administration and defence sector, it fell by 1.1%, subtracting 0.06 proportion factors from GDP.
The remainder of the economic system fared higher.
In the non-public sector, output rose by 0.2% within the month as delicate climate boosted output within the building, hospitality and leisure sectors.
These figures are a giant departure from 20 years in the past when Britain loved progress of between 2-3 per cent a 12 months.
Instead, we are able to anticipate the economic system to shrink by 0.3 per cent this 12 months, if latest forecasts by the International Monetary Fund (IMF) are to be believed. This will make Britain the worst performer of our G7 neighbours.
Again, these forecasts are an enchancment on earlier projections however not sufficient to dramatically change the nation’s prospects.
Weak progress mixed with excessive inflation bodes ailing for our dwelling requirements.
The Office for Budget Responsibility is pencilling within the greatest two-year drop in disposable incomes because the 1950’s.
However, it is a difficult dynamic as a result of efforts to stamp out inflation typically inflict – and require – a interval of financial ache.
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If something, brighter than anticipated financial information in latest months will give the Bank of England extra respiration room to boost rates of interest from their present stage of 4.25%.
The full results of the earlier charge rises haven’t but filtered via however additional rises could also be required to dampen financial demand sufficient to deliver costs beneath management.
Unfortunately, a policy-induced recession later within the 12 months could also be essential.
Source: information.sky.com”