A mixed day for sterling yesterday as it managed to avoid further falls against the euro, while slipping further against the US dollar before recovering somewhat in the afternoon and evening.
Yesterday saw largely negative economic data emerging from the eurozone, including inflation rising again, and faster than expectations in some countries, which prompted ECB chief Christine Lagarde to say that a 50 basis point rate hike was still on the table at the next ECB meeting in a few weeks. She said: “We still have to pursue higher interest rates, we don’t know the peak yet.” However, there was also slightly disappointing unemployment data, so the ECB continues to face a balancing act.
There was little data in the UK, however there was further hope that the UK will avoid a deep recession. The Bank of England’s chief economist Huw Pill noted that the economy looks to be doing better than expected: “[Survey indicators] have surprised to the upside, suggesting that the current momentum in economic activity may be slightly stronger than anticipated.”
Another indicator that will please the Chancellor is evidence from the Institute for Fiscal Studies (IFS) that the over-50s are returning to the jobs market. Nearly 200,000 people aged 50 to 64 moved back into the jobs market in the final quarter of 2022. “If ‘unretirements’ continue, this could ease pressures on the labour market,” said Xiaowei Xu of the IFS. “But if the return is triggered by the cost of living crisis, it is no cause for wider celebration – it is a response to people becoming poorer.”
A worry for the UK’s hopes of becoming a post-Brexit science and tech superpower has been the threat of large companies choosing to list in New York rather than London. Two more to choose New York over London are Arm Holdings, a British microchip designer, and CRH, the buildings materials group.
In UK politics, Labour leader and currently leading the polls to be next prime minister, Sir Keir Starmer has appointed Sue Gray (the civil servant leading the ‘party-gate’ investigation) to be his chief of staff, much to the fury of Boris Johnson supporters.
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