New PM will need to get a grip after the summer’s grim news
The torrent of bad news can feel close to overwhelming at times, even for those of us who grew up in an era of permanent economic crisis in the Seventies and Eighties.
After yesterday’s 18% inflation bombshell from Citi — which few other City soothsayers seem keen to knock down — today brings downbeat PMI readings, forecasts of 4% interest rates and a warning that the interest bill on Britain’s index linked gilts could reach 3% of GDP next year.
Only the still remarkably robust jobs market seems able to provide a glimmer of hope among the storm clouds. Oh wait hang on, what’s that dropping into my inbox? News of a surge in enquiries from employers looking for advice on making redundancies.
It is sadly inevitable that unemployment will start to rise from its current level of 3.8% over the winter as consumer confidence and spending nosedives and recruitment ends.
The absence of effective leadership from Number 10 adds to the growing sense of a crisis out of control. Whoever finally gets the keys now has a huge amount of lost ground to make up after a summer when a feeling of hopelessness was allowed to set in without any fightback from the Government to cling on to.
It is only the frailest of green shoots, but today’s PMI data did flag up an easing in the rate of input cost inflation to the slowest in nearly a year. If the trend continues, that should start to feed through the consumer next year sometime after the peak is passed in the New Year.
The game changer would be an end to the conflict in the Ukraine, but following the assassination of Darya Dugina near Moscow yesterday that seems as far away as ever.
We must just hope that the reality this winter is not quite as grim as the headlines sometimes make it seem.