The predictions of the Office of Budget Responsibility (OBR) have been undermined by an upturn in inflation in February, just a week after the OBR published a graph predicting a steady fall throughout the year. Inflation peaked at 11.1% last October and will fall to 2.9% by end-2023, the OBR said.
Rising costs in services sectors are identified as fuelling inflation (Financial Times). However, the rise is unlikely greatly to surprise those in the food sector, which was predicting last year that food price inflation would peak well into 2023. Manufacturers will have been keen to recoup the cost of rising energy, wage and other costs.
Inflation levels are also reported to be concerns in the EU and in the US. Prices pressures are strong and broadly-based, according to Joachim Nagel, president of Germany’s Bundesbank, who says that central banks in Europe and the US should be “stubborn” and keep raising borrowing costs to tackle inflation.
The banking system is also stressed by the crises at Credit Suisse and Silicon Valley Bank. Regulators, not least in the UK, are trying to balance a desire to keep banks loaning money with lending controls to ensure banks stay in business.
Budget – what do you think?
At a CBI call last Friday, the view was what I would call pragmatically positive but some on the call were much more critical of government. An announcement a few days before had undermined confidence across the infrastructure sector; sovereign investment funds were giving up on the UK; nothing works. The Investment Zones failed to impress. There was next-to-nothing on education, skills, net zero.
That said, EAMA members seem, as a generalisation, to still be busy, but perhaps a bit apprehensive.
We welcome your views on chancellor’s Budget last week. On reflection, do you think it was:
- a good Budget;
- neither good nor bad, or
- a poor Budget and missed opportunity.
Please highlight the top two or three reasons for your answer. Your responses will be treated in confidence, anonymised, aggregated, and passed on to HM Treasury.
If you have wish to respond to Jack and/or have any comments to add, please contact him directly (email: [email protected]) and, if possible, please copy MTA on your message (email: [email protected]).