5 June 2023 - Property market back in turmoil
The UK economy as expected avoided a contraction in the first quarter despite an unexpectedly large fall in growth in March. The economy shrunk by 0.3% in March which highlighted its fragility. With the Bank of England under pressure to continue to hike short-term interest rates, it has little “wiggle room” to play with which could see monetary policy take the economy into a recession. Although there was a collective “sigh of relief” from the market, the Government, and the Central Bank when the IMF concluded that the country is unlikely to suffer a recession this year, there is a growing concern that the economy may struggle to avoid a contraction in 2025. Rishi Sunak and his Cabinet are clearly relying on an improving economic performance to provide them with a slim chance of remaining in Government following the General Election which must take place before January 2025, but is slated to happen in the Autumn of next year. The BBC interviewed Larry Summers, the eminent economist, and Treasury Secretary during the Presidency of Bill Clinton last week and painted a particularly dark picture of the country’s prospects. He believes that it is “highly unlikely” that there will be no recession during the life of this Parliament, also commenting that Brexit is the single factor that marks the UK from its G7 partners when it comes to inflation, which will in time be seen as a “historic error”. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.