March has been positive for sterling, rising against almost all of its major rivals including a gain of around 3-4% on the US and Australian dollars and Norwegian krone, but relatively unchanged against the euro. That was the pattern for yesterday’s movements too.
This morning we have had it confirmed that that UK missed a technical recession, and by more than expected, with a revised quarterly growth in the economy of 0.1% in the final three months of 2022, driven by higher spending on travel and tourism, plus housing and government consumption.
House prices have taken a sharp turn downwards, according to the Nationwide, with a 3.1% fall year-on-year and 0.8% price decline just in the last month – the biggest fall since 2009.
Inflation in the eurozone has continued to fall, with French inflation just revealed to be declining to 5.6% and following yesterday’s drop in Germany from 8.7% to 7.4% and Spain’s astonishing drop from 6% to 3.3%. As many central bank rate-setters have been saying, when inflation is flushed out of the system it can fall fast.
We will shortly be hearing overall eurozone inflation.
In politics, UK chancellor Jeremy Hunt was scathing about President Biden’s Inflation Reduction Act yesterday, while announcing a Green Finance Strategy of his own, including up to £30bn in investment. Writing in yesterday’s Times, he said “We are not going toe-to-toe with our friends and allies in some distortive global subsidy race… the long-term solution is not subsidy but security”. The Labour Party, on the other hand, is proudly proclaiming its own green prosperity plan and urged the UK to “stop moaning” about the US.
One industry veteran and former boss of Aston Martin told the BBC that the UK electric car industry could disappear without UK subsidies similar to the US’s.
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