Oxford University, founded in the 12th century, stands as a beacon of scholarship and tradition. Its roots trace back to 1096 during William II’s reign. The university is approximately 230 years older than the Aztec Empire.
Teaching would have likely existed in some form within its hallowed halls. Imagine those early scholars, their minds ablaze with curiosity, gathering under the ancient spires.
Now, let’s compare this age to another remarkable entity: the Aztec civilization. The Aztecs flourished around the 14th century. Their vibrant culture, intricate temples, and awe-inspiring pyramids came some 230 years after the university was established.
Imagine the scene: while Oxford’s dons debated philosophy, the Aztecs were constructing Tenochtitlan, their magnificent capital. As Oxford’s colleges took shape, the Aztecs were creating intricate codices and performing sacred rituals.
Oxford University, with its nine centuries of continuous existence, predates the Aztec Empire by several lifetimes: a testament to the enduring quest for knowledge across civilizations.
UK chancellor Jeremy Hunt revealed the British ISA as part of the Spring Budget 2024.
The British ISA aims to boost demand for UK businesses and encourage investment in UK-focused assets.
Key Features
Additional Allowance
The British ISA provides a separate £5,000 annual allowance in addition to the existing £20,000 ISA allowance.
Tax Advantages
Like other ISAs, investors in the British ISA will not pay tax on capital gains or income.
Investment Focus
While it’s not yet clear whether the new ISA will be exclusively for UK shares, it is expected to support UK-focused funds and investment trusts.
Eligibility Uncertainty
The inclusion of UK gilts or UK corporate bonds remains uncertain.
Consultation Period
The consultation period for the British ISA runs until June 6, 2024.
Potential Impact – Reviving UK Stock Market
The British ISA aims to revive interest in the UK stock market, which has faced challenges since the Brexit vote in 2016.
Supporting UK Companies
By providing tax-free savings opportunities, the ISA encourages investment in UK businesses.
Fund Industry Support
Fund management firms, including Premier Miton, lobbied for the British ISA’s creation.
Historical Context
The British ISA draws parallels with its predecessor, the personal equity plan (PEP), which focused on UK shares and funds.
ISAs replaced PEPs in 1999.
Conclusion
In summary, the British ISA introduces an additional allowance for UK-focused investments, supporting savers and UK companies alike. Its impact on the stock market and investor sentiment remains to be seen, but it represents a step toward bolstering the UK’s economic landscape
By ensuring that companies are valued fairly, a stronger stock market will facilitate the capital raising process for companies that seek to grow and attract more listings. This will have a positive impact on the economy and employment and is ultimately in everyone’s interest.
British telecoms group BT said Wednesday 21st February 2024 that it had agreed to sell London’s iconic BT Tower – once an important piece of network infrastructure
It has been sold to developer MCR Hotels for £275 million ($346.6 million).
The 189-meter structure has loomed over the capital city’s central Fitzrovia since 1965, when it opened as the Post Office tower.
It carried telecommunications signals from London to the rest of the country, but its microwave aerials were made redundant more than a decade ago.
It was also known for a revolving restaurant on its 34th floor, which took 22 minutes to complete a rotation.
MCR Hotels owns 150 properties, including the TWA Hotel located in the former TWA Flight Centre at JFK International Airport in New York, USA.
The U.K. logged a record £16.7 billion net budget surplus in January 2024, according to official figures released on Wednesday 21st February 2024
The Office for National Statistics noted that the country’s public finances usually run a surplus in January, unlike during other months, as receipts from annual self-assessment tax returns come in.
Combined self-assessment income and capital gains tax receipts totaled £33 billion in January, the ONS noted, down £1.8 billion from the same period of last year.
Total government tax receipts came in at a record £90.8 billion, up £2.9 billion compared to January 2023.
Government borrowing during the financial year spanning to the end of January 2024 was £96.6 billion, £3.1 billion lower than over the same 10-month period a year ago and £9.2 billion lower than the £105.8 billion previously forecast by the independent Office for Budget Responsibility.
Most of the world’s largest tech companies, including Microsoft, Amazon and Google have agreed to tackle what they are calling deceptive artificial intelligence (AI) in elections
The tech accord
The twenty companies have signed an accord committing them to fighting voter-deceiving content. They say they will deploy technology to detect and counter the material.
The Tech Accord to Combat Deceptive Use of AI in 2024 Elections was announced at the Munich Security Conference on Friday 16th February 2024.
The issue has come into sharp focus because it is estimated up to four billion people will be voting this year in countries such as the U.S., UK and India.
Technology to mitigate risk
Among the accord’s pledges are commitments to develop technology to mitigate risks related to deceptive election content generated by AI, and to provide transparency to the public about the action firms have taken.
Other steps include sharing best practice with one another and educating the public about how to spot when they might be seeing manipulated content.
Signatories include social media platforms X, Snap, Adobe and Meta, the owner of Facebook, Instagram and WhatsApp.
Proactive
However, the accord has some shortcomings, according to computer scientist Dr Deepak Padmanabhan, from Queen’s University Belfast, who has co-authored a report on elections and AI.
But he reportedly said they needed to take more proactive action instead of waiting for content to be posted before then seeking to take it down.
That could mean that realistic AI content, that may be more harmful, may stay on a platform for longer compared to obvious fakes which are easier to detect and remove, he suggested.
Target
The accord’s signatories say they will target content which deceptively fakes or alters the appearance, voice, or actions of key figures in elections.
It will also seek to deal with audio, images or videos which provide false information to voters about when, where, and how they can vote.
We have a responsibility to help ensure these tools don’t become weaponised in elections, Brad Smith, the president of Microsoft is reported to have said.
These measures, in my opinion, are a sticking plaster and will not stop the spread of dishonest and fake news!
The UK’s inflation rate remained at 4% in January 2024, despite the first monthly fall in food prices in two years, ONS figures show.
January U.K. inflation held steady at 4% year-on-year benefitting from easing prices for furniture and household goods, food and non-alcoholic beverages.
According to the latest figures from the Office for National Statistics (ONS), prices for food and non-alcoholic beverages fell on a monthly basis by 0.4%, marking the first decrease since September 2021.
The core CPI figure excluding volatile food, energy, alcohol and tobacco prices annual reading was 5.1%, below the 5.2% estimate – but only a micro 0.1% difference.
The latest inflation data is a reflection of what is happening in the labour market: a tight labour supply is sustaining high wage growth and thus underlying inflationary pressure.
UK interest rates have been left unchanged at 5.25% by the Bank of England as widely expected by commentators.
It is the fourth time in a row the Bank has held rates at 5.25%.
The Bank of England had previously raised rates 14 times in a row to curb inflation, leading to increases in mortgage rates but also creating better rates for savers.
Interest rate chart from 2007 to January 2024 demonstrates just how low interest were between 2009 and 2022
Interest rate chart from 2007 to January 2024 demonstrates just how low interest were between 2009 and 2022
Attitude shift
There is a noticeable shift in opinion as the committee entertained the possibility of discussing the feasibility of cuts.
There was a three-way split, with two members of the Monetary Policy Committee (MPC) voting to increase the bank rate to 5.5%; one to reduce it to 5%; and six were in favour of sticking with 5.25%.
With inflation falling it is very likely the interest rates will be reduced by 0.25% by March 2024. Just take a look at the reduction in savers rates that have already occurred.
The anticipation is for a rate reduction soon.
The clue is that savers rates are being cut.
But
The Bank of England Governor, Andrew Bailey, has made clear that for him the key question is: ‘For how long should we keep rates at the current level?’
There may be disappointment ahead then – but a rate cut is next and I still expect it by Easter.
Spinning the benefits of a tax cut scenario as Chancellor Jeremy Hunt hints at further tax cuts
The Chancellor, Jeremy Hunt, has given strong hints that he wants to cut taxes in the spring Budget.
Mr Hunt reportedly said that countries with lower taxes have more ‘dynamic, faster growing economies.‘ Didn’t Liz Truss say something like that too? But of course, she didn’t ‘cost it out’ in her mini budget apparently – but she also wanted lower taxes for growth none-the-less.
Autumn statement
In the Autumn Statement, the chancellor reduced national insurance for workers by 2% and announced tax relief for businesses. If inflation falls, followed by lower interest rates, Mr Hunt may consider he has scope for further tax cuts.
At the World Economic Forum, in Davos, Switzerland – he was also reported to have said that the: ‘direction of travel’ indicates that economies growing faster than the UK, in North America and Asia tend to have lower taxes. ‘I believe fundamentally that low-tax economies are more dynamic, more competitive and generate more money for public services like the NHS,’ he reportedly said.
It is widely expected that the chancellor will focus on income tax in the upcoming Budget due on 6th March 2024
Lower than expected government borrowing last month has increased the possibility of tax cuts in the Budget, analysts say.
UK Borrowing fell to £7.8bn in December 2023, the Office for National Statistics (ONS) indicated. Interest payments dropped sharply due to a faster than expected decline in inflation. Analysts said the latest figures could give the chancellor more wiggle room for tax cuts.
December’s borrowing figure was £8.4bn less than a year earlier, and the lowest figure for the month since 2019.
Interest payments on government debt fell to £4bn, down by £14.1bn from December 2022.
Inflation, rose marginally to 4% in December, up from 3.9% in November 2023.
Economists had forecast a slight fall but unexpected rises in alcohol and tobacco prices were behind the surprise rise.
However, with energy bills predicted to come down in 2024, there are still expectations of interest rate cuts later this year.
On target still for 2%?
As we have seen in the Germany, the U.S., and France, inflation does not fall in a straight line, ‘but our plan is working and we should stick to it,‘ Jeremy Hunt reportedly said in a statement.
UK inflation from April 2019 to December 2023
UK inflation from April 2019 to December 2023
Unprepared for both the start and the end of the pandemic
Increases in the cost of energy and food costs, started by pandemic lockdowns ending exasperated further by Russia’s invasion of Ukraine and more recently the conflict in Israel have put household finances under extreme pressure.
The UK and other countries were woefully underprepared for all of these events as they ‘began’ and at the ‘end’. We did not prepare to come out of them – there was no exit plan!
Markets and traders are still expecting BoE to cut its base rate in 2024 due to the fast-falling inflation rate. It peaked at 11.1% in October 2022 – and now sits at 4%.
The question is: will the economic recovery be good enough to allow the Bank of England to start cutting rates?
The UK interest rate currently sits at 5.25%.
‘What’s inflation?’ ‘Dunno, but my beer’s gone up!’
The bumper festive period led to the High Street giant to raise its profit forecast by 5% to £960m for 2024. NEXT has about 460 outlets in the UK and Ireland.
The company also expects sales to grow by 3% in 2024/25 but warned that attacks on shipping in the Red Sea could cause delays and disruptions to its stock supply.
NEXT’s full price sales were up 5.7% in the nine weeks to 30th December, £38 million ahead of its previous guidance of 2%.
The company’s share price closed at: 8146.00 on 29th December 2023, as of 4th January 2024 the share price was: 8550.
Three months share price data for NEXT.
Is this an indication of better news for the UK high street in general?
Wasted wind power will add £40 to the average UK household’s electricity bill in 2023, according to a think tank.
That figure could increase to £150 in 2026, Carbon Tracker has estimated.
When it is very windy, the grid cannot handle the extra power generated. So, wind farms are paid to switch off and gas-powered stations are paid to fire up. The cost is passed on to consumers.
The government said major reforms will halve the time it takes to build energy networks to cope with extra wind power. Energy regulator Ofgem announced new rules in November 2023, which it said would speed up grid connections.
Bottleneck
Most of the UK’s offshore wind farms are in England. Dogger Bank, off the coast of Yorkshire is the largest in the world. Meanwhile, around half of onshore wind farms are in Scotland but most electricity is used in south-east England.
Carbon Tracker said the main problem in getting electricity to where it is needed is a bottleneck in transmission.
Wind curtailment
The practice of switching off wind farms and ramping up power stations is known as wind curtailment. This cost is passed on to consumers, it said. Carbon Tracker researches the impact of climate change on financial markets. It said since the start of 2023, wind curtailment payments cost £590m, adding £40 to the average consumer bill.
It warned the costs were set to increase adding £180 per year to bills by 2030. Wind farms are being built faster than the power cabling needed to carry the electricity.
Cable issue
‘The problem is, there are not enough cables. The logical solution would be to build more grid infrastructure,‘ said an analyst at Carbon Tracker. ‘It’s not even that expensive,’ he added, compared with mounting wind curtailment costs.
Industry group RenewableUK reportedly said that grid constraints, ‘reflect a chronic lack of investment in the grid.’
‘We need to move from a grid which is wasteful, to one that’s fit for purpose as fast as possible.’
However, historically it has taken between 10 and 15 years for new transmission cables to be approved.
Maybe more battery storage plants around the UK would help reduce the bottlenecks? As renewable power continues to expand, this would enable the extra power to be stored to use later.
This would be better than firing up antiquated fossil fuel power plants.
Are you selling online and making a little extra income?
Well, if you are, as from 1st January 2024 you will now fall foul of UK tax rules if you do not declare the income generated from these sales.
Companies like Etsy, eBay, Vinted, Airbnb etc. are obliged to collect and share details of such transactions with the tax authorities. That will allow HMRC to zero in on anyone who should be declaring the extra income but isn’t.
While HMRC was already able to request information from UK-based online operators, from the start of this year there are new rules that the UK has signed up to in cooperation with the OECD – Organisation for Economic Cooperation and Development, as part of a global effort to clamp down on tax evasion.
New rules
The new rules require digital platforms to report the income sellers are getting through their site on a regular basis.
It will apply to sales of goods such as second-hand clothes and items that have been handcrafted, but also services such as: food delivery, taxi hire, freelance work and accommodation lets or even renting out your driveway for parking.
Rule summary
Online sellers already paying tax do not need to alter what they are already doing.
Individuals have a £1,000 tax-free allowance for money made through property.
There is also a £1,000 allowance for trading income – for example, if you offer tutoring or gardening, or if you are selling new or second-hand items online.
People earning below those thresholds may not have to fill in a tax return, but should keep records in case they are asked for them.
The information will be shared between countries that have signed up to the OECD tax rules.
The UK government said the new rules would help it ‘bear down on tax evasion’, as sellers on digital platforms would now be treated more like traditional businesses.
House prices have ended the year 1.8% lower in the UK, according to Nationwide Building Society
The Nationwide forecasts no growth or a further fall in 2024.
The lender said the average house price across the UK was £257,443 in December 2023. This was flat compared to November 2023 but down compared to December 2022.
The lender reportedly said that consumer confidence ‘remains weak’, despite some mortgage rates falling in anticipation for Bank of England (BoE) to cut borrowing costs in the months ahead.
The number of housing transactions has been running at around 10% below pre-Covid levels, Nationwide reported. The fall was more pronounced for those buying a house using a mortgage – down 20% compared to before the pandemic.
However, the volume of cash deals continues to run above the levels recorded before Covid hit.
The UK is at risk of recession after revised figures indicate the economy shrank between July and September 2023.
A recession is defined as when the economy shrinks for two three-month periods in a row.
Gross Domestic Product (GDP), which measures the health of the economy, contracted by 0.1% after previous estimates suggested growth has been flat. There was no growth between April and June 2023, after it was first calculated to have risen by 0.2%.
There have been concerns over the UK’s weak economic growth for a while now, but the UK has managed to avoid a recession so far. Whether or not there is a small recession, the bigger picture for analysts is that they expect real GDP growth to remain subdued throughout 2024. However, bear in mind that projections and forecasts do change, as already demonstrated.
Earlier this week, data showed that inflation, which measures the rate of price rises, slowed by more than expected to 3.9% in the year to November 2023, down from 4.6% in the previous month.
UK inflation fell by more than expected in November 2023, driven largely by a drop in fuel prices.
Inflation dropped to 3.9% in the year to November 2023, down from 4.6% in October 2023. Other than fuel, slowing food and household items were also behind the drop.
Inflation has fallen a long way from its peak in 2022, it is still almost double the Bank of England’s 2% target.
The Bank has put up interest rates 14 times since December 2021 to try to slow price rises, pushing up savings rates but also borrowing costs.
The Bank of England Interest rate is currently at 5.25%, a 15-year high.
The economy fell by 0.3% October, after growth of 0.2% in September 2023.
UK GDP is 0.0%
The UK economy shrank more than expected in October 2023, as higher interest rates hit consumers. The bad weather didn’t help either.
Household spending has been dented by rate rises as the Bank of England tries to tackle inflation. It is due to make its next rate decision on Thursday 14th December 2023. Retail and tourism were hit by severe weather hit the UK in October 2023.
Analysts had predicted that the economy would fall by just 0.1% but services, manufacturing and construction sectors all contracted more than expected.
The UK economy has been stagnating and the Prime Minister has promised to speed up economic growth. But no significant recovery is expected until January 2025.
Chancellor’s spin
Commenting on the latest figures, Chancellor Jeremy Hunt said it was ‘inevitable economic growth would be subdued, whilst interest rates are doing their job to bring down inflation.’
The figures underline the ongoing impact of the cost-of-living crisis and the tools employed by our ‘decision’ makers on our behalf.
Britcoin is a potential British digital currency that would be issued by the Bank of England and backed by the Government.
It would be tied to the pound and have a stable value, unlike cryptocurrencies such as Bitcoin. It would be accessible through digital wallets and interchangeable with cash and bank deposits. The Treasury and the Bank of England are consulting on its launch, which could take place by 2030.
Britcoin could be used for everyday transactions, both in-store and online, and could make payments more efficient and enable innovation. However, some MPs have warned that Britcoin could cause severe financial damage and undermine the role of banks.
Some MPs have warned that Britcoin could cause severe financial damage and undermine the role of banks for several reasons.
Concerns about introducing a digital pound
Britcoin could increase the chance of bank runs, if customers were able to quickly and easily switch their bank deposits into digital pounds, especially during times of financial stress or panic. This could reduce the liquidity and solvency of banks and make them more vulnerable to failure.
Britcoin could also raise the cost of borrowing for banks and consumers, as banks would need to replace the funding that they would lose from deposits with more expensive sources. The Bank of England estimated that if 20% of bank deposits turned digital, it could result in a rise in interest rates on commercial loans.
Britcoin could pose risks to data privacy and security, as the government or third parties could potentially access, track, or control how users spend their digital funds. This could raise ethical and legal issues and require robust regulation and protection.
Britcoin could also have unintended consequences on the wider economy and society, such as affecting monetary policy, financial inclusion, innovation, and competition. The MPs said that the benefits and costs of Britcoin should be clearly evidenced before any decision is taken to introduce it.
Art illustration: Digital £ pound proposal – Britcoin
The development of a state-backed ‘digital pound’ should proceed with caution, MPs have warned.
The benefits of the currency are still unclear and there must be systems in place to protect cash access and privacy, the Treasury Committee said in a report.
The Bank of England (BoE) and the Treasury have been consulting on the idea since February 2023. They are currently designing what such a system could look like. The CBDC would be directly issued by the Bank of England (BoE), just like banknotes.
This means people would have all the same safety and security that they have with their cash currently, which is different to cryptocurrencies that fluctuate in value and are generally run by private companies.
The UK economy will grow much more slowly than expected in the next two years as inflation takes longer to fall, the Office for Budget Responsibility (OBR) says.
Are we locked in a never-ending austerity cycle?
Living standards are also not expected to return to pre-pandemic levels until 2027-28, the Office for Budget Responsibility (OBR) said. It comes as the chancellor announced tax cuts and a rise in benefits in his 2023 Autumn Statement.
The OBR publishes two sets of economic forecasts a year, which are used to independently predict or guess what may happen to government finances. These are based on its best guess calculations about and are subject to ‘change’.
It’s just a forecast – so should we take any notice?
According to the OBR, the UK will grow by 0.6% in 2023 – much better than previous predications last autumn, when it calculated the economy would fall into recession and shrink.
However, it slashed its growth outlook to 0.7% in 2024 and 1.4% in 2025 – down from a previous forecast of 1.8% and 2.5%.
The OBR warned that inflation – currently 4.6% – will only fall to 2.8% by the end of 2024, before reaching the Bank of England’s 2% target in 2025. Previously it forecast inflation would easily beat the target next year.
OBR & ONS data set
These gloomy predictions put the Government on a collision course with the Bank of England and Britain’s budget watchdog as they clash over whether or not the UK economy is on the up.
Spending plans outlined in the chancellor’s Autumn Statement represent ‘a very big fiscal risk’, according to the UK’s OBR.
Mr Richard Hughes, chair of the Office for Budget Responsibility (OBR), told MPs on the Treasury Select Committee that spending plans carried a level of ‘uncertainty’. He suggested that much of the promised spending is funded by projected savings rather than income already received.
Last week, the OBR slashed its forecast for UK economic growth.
In March, the OBR said it expected GDP – a measure of the size and health of a country’s economy – to grow by 1.8% in 2024 and 2.5% in 2025.
Predications cut
Those predictions have now been cut, with a new forecast suggesting the UK economy will grow by 0.7% in 2024 and 1.4% in 2025.
‘It is very difficult to assess the credibility of the government’s spending plans, because after March 2025 the government doesn’t have any spending plans,’ Mr Hughes said, as he and other members of the OBR faced questions on the Autumn Statement.
Tax by stealth
Even though the chancellor announced a cut to NI rates, he opted to leave NI and income tax thresholds untouched, meaning they remain frozen until 2028. By doing this, more workers will fall into the higher tax bracket thus creating larger than expected tax revenue for the treasury. And, as workers secure pay rises, they may end up paying more tax if they are dragged into that higher tax band.
Some 2.2 million more workers now pay the basic rate income tax of 20% compared with three years ago, according to official figures, while 1.6 million more people have found themselves in the 40% tax bracket in the same period.
Just a thought, wasn’t the former UK prime minister ousted because of unfunded projections or was that unfunded tax cuts?
The governor of the Bank of England, Andrew Bailey has raised concerns over economic growth as he warned again that interest rates will not be cut in the ‘foreseeable future’.
The bank boss said he was concerned over the UK economy’s potential to grow. It comes after the government’s forecaster cut its growth outlook for the UK, due to high inflation, interest rates, energy and food price increases which were exacerbated by the Covid pandemic and Russia’s invasion of Ukraine.
Inflation, which is the rate consumer prices rise at, has dropped sharply in recent months, falling to 4.6% in the year to October largely as a result of lower energy prices.
However, it is still more than double the Bank of England’s 2% target and Mr Bailey warned lowering inflation further would be ‘hard work’.
Interest rates are currently at 5.25%, a 15-year high, which has pushed up borrowing and mortgage costs.
It is widely reported that HSBC‘s online banking system is experiencing some problems today, 24th November 2023.
According to the news reports, many customers are unable to access the app or the website or make payments.
The bank has acknowledged the issue and said it is working hard to fix it as soon as possible. Some users have also reported missing money from their accounts.
Downdetector, which tracks websites, showed more than 4000 people reported they could not access HSBC services.
‘It is impacting HSBC UK customers only – there is no impact to First Direct or M&S Bank customers’, a spokesperson for the bank said.
Some of the main takeaways from the chancellor’s autumn statement November 2023
National Insurance rate cut from 12% to 10% from 6 January, affecting 27 million people.
The 75% business rates discount for retail, hospitality and leisure firms in England extended for another year.
Class 2 National Insurance – paid by self-employed people earning more than £12,570 – abolished from April.
Class 4 National Insurance for self-employed – paid on profits between £12,570 and £50,270 – cut from 9% to 8% from April.
Full tax break permitting companies to deduct spending on new machinery and equipment from profits – now made permanent.
Funding of £4.5bn to attract investment to strategic manufacturing sectors, including aerospace, green energy, aerospace, life sciences and zero-emission vehicles.
Some £500m over the next two years to fund artificial intelligence (AI) innovation centres.
New premium planning services for England, with faster decision times for major business applications and fee refunds when these are not met.
Defence spending to remain at 2% of national income – a Nato commitment.
Overseas aid spending kept at 0.5% of national income, below the official 0.7% target.
Reaffirms previous commitments made last autumn to provide £14.1bn for the NHS and adult social care in England, as well as an extra £2bn for schools, in both 2023‑24 and 2024-25.
Fuel duty remains 52.95p per litre for petrol and diesel, after the chancellor announced a 5p per litre cut for 12 months in March 2023
State pension payments to increase by 8.5% from April, in line with average earnings.
Claimants in England and Wales deemed able to work who refuse to seek employment to lose access to their benefits and extras like free prescriptions.
UK autumn statement – art illustration of office worker preparing data
Further £1.3bn to help people who have been unemployed for over a year.
National Living Wage – to increase from £10.42 to £11.44 an hour from April.
Funding of £1.3bn over the next five years to help people with health conditions find jobs.
OBR Stats
Independent Office for Budget Responsibility (OBR) expects the economy to grow by 0.6% this year and 0.7% next year, rising to 1.4% in 2025; then 1.9% in 2026; 2% in 2027 and 1.7% in 2028.
Living standards not expected to return to pre-pandemic levels until 2027-28.
Underlying debt forecast to be 91.6% of GDP next year; 92.7% in 2024-25; 93.2% in 2026-27; before declining to 92.8% in 2028-29.(One to watch)
OBR forecasts that inflation – the rate prices are rising – will fall to 2.8% by the end of 2024, before reaching the Bank of England’s 2% target rate in 2025.(One to watch)
The OBR says higher inflation means real value of departmental budgets will be £19bn lower by 2027/28 compared with March 2023 forecasts.
Borrowing forecast to fall from 4.5% of GDP in 2023-24; to 3% in 2024-25; 2.7% in 2025-26; 2.3% in 2026-27; 1.6% in 2027-28 and 1.1% in 2028-29.(One to watch)
UK inflation fell to 4.6% in October 2023, down from 6.7% in September 2023.
This is the lowest rate of price increases since 2021 and the bigger than expected fall should provide some relief to UK households gripped by the cost-of-living crisis.
The main factors that contributed to the drop in inflation were largely due to lower energy prices, food and non-alcoholic drink prices, and airfares. Economists suggested that the main reason inflation fell from its peak of 11.1% in October 2022 was due to the fall in the energy price cap, which limits what suppliers can charge consumers per unit of energy.
However, the UK still has the highest inflation rate of any G7 country, and some economists warn that the Bank of England (BoE) may need to raise interest rates to prevent inflation from rising again.
Target hit
The UK government will no doubt rejoice today as the end-of-year 5% has been achieved earlier than expected. But don’t party too early, the actual target is 2%. There is a limit to how much credit ministers can take for the fall as energy prices settle.
The FTSE100 was happy, it climbed some 100 points in morning trade.
