Page 4 - ISO April 2023
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        Can the UK Escape the Economic Slow


        Jeremy Batstone-Carr, European Strategist, Raymond James Investment Services Ltd*

        As  every  Chancellor  of  the  Exchequer  surely knows,  the   a hitherto listing ship, provided the opportunity for the implanting
        best Budgets are those in which the incumbent struts and   of foundation stones aimed  at constructing a new economic
        frets their hour upon the stage and then are seen (or heard)   framework and faster economic growth in the future. For the
                                                            immediate present, a package measures widely trailed in
        no more. On this occasion Mr Jeremy Hunt “lucked out”   advance, amounted to a £21.9bn “giveaway” over the 2023/24
        insofar as his speech and its implications for the UK econo-  fiscal year, rather more generous than had been anticipated.
        my’s near-term outlook were entirely overshadowed by   Beyond that, measures costing the Treasury a net £10.4bn out to
        events unfolding in the banking sector, both in the United   2027/28 was unequivocally better news than pessimists had
                                                            expected. In passing, and of interest to everybody, the unques-
        States and Europe. However, for those sufficiently inter-  tionable highlight was the decision to cancel the scheduled 20%
        ested in prospects for embattled  UK economic activity   increase (£2,500 to £3,000) in the Energy Price Guarantee as it
        there was much to pore over. Billed as a “Budget for   relates to all utility bills from 1st April. The subsidiary decision
        Growth” the measures announced do go some way towards   to scrap a 23% increase in forthcoming fuel duty was also well
                                                            received and will further ease the country’s long-standing cost
        extricating the country from its immediate travails, how-  of living crisis.
        ever, a coherent plan for the longer term is required over
        and above laying the foundations for the next election   In consequence of these measures the Office for Budgetary
                                                            Responsibility (OBR) is no longer forecasting a recession in 2023
        campaign.                                           and growth estimates for 2024 have been marked higher. This is
                                                            highly significant as the OBR’s previous assertion, that the UK
        Following the UK administration’s autumn crisis, the first
        requirement deemed essential for the incoming Chancellor was   economy would enter recession in Q3 of last year and that it
        a cool nerve and a steadying hand on the country’s purse strings.   would last for five quarters garnered considerable negative
        Mr Hunt has so far excelled himself, delivering sensible eco-  attention. It is now thought likely that while a slide into mildly
        nomic  prescriptions when the  economy  needed them  most.   negative territory is inevitable over the first quarter of the cur-
        Fiscal credibility may not yet be fully restored, but the return to   rent year (once lagging data is made available), a slow revival
        calmer waters for the domestic gilt-edged government bond   should take place thereafter to the extent that real GDP growth
        market and sterling’s rediscovered stability on the foreign   will emerge at just -0.2% once data for 2023 is published, rising
        exchanges illustrate the extent to which important steps are   to +1.8% in 2024. These upwardly revised expectations are
        being taken in the right direction.                 +1.2%-points and +0.5%-points respectively higher than
                                                            November’s forecasts.
        This Spring Budget, more than simply adding greater stability to

        *An affiliate of Raymond James & Associates, Inc., and Raymond James Financial Services, Inc.

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