UK economy: Chancellor says outlook looking ‘brighter’ – but there isn’t a huge amount to celebrate
Jeremy Hunt struck an upbeat tone following the publication of the latest economic growth data for February.
“The economic outlook is looking brighter than expected – GDP grew in the three months to February and we are set to avoid recession,” he said.
In some respects he’s right.
Even though the country was deep into a winter energy crisis, Britain avoided a recession towards the end of last year.
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The economy confounded expectations again in January to eke out growth of 0%.
At 0%, February’s performance was a little weaker than expected but the economy has been in positive territory for the past three months.
However, there isn’t a huge amount to celebrate.
While the economy has proved more resilient than some feared, this doesn’t change the overall picture, which is one of economic stagnation.
Jeremy Hunt
In February, the country was held back by industrial action of teachers, civil servants and healthcare workers, which weighed on public sector output.
Output in the education sector dropped by 1.7% month-to-month, subtracting 0.10 percentage points from growth in GDP.
In the public administration and defence sector, it fell by 1.1%, subtracting 0.06 percentage points from GDP.
The rest of the economy fared better.
In the private sector, output rose by 0.2% in the month as mild weather boosted output in the construction, hospitality and entertainment sectors.
These figures are a big departure from 20 years ago when Britain enjoyed growth of between 2-3 per cent a year.
Instead, we can expect the economy to shrink by 0.3 per cent this year, if recent forecasts by the International Monetary Fund (IMF) are to be believed. This will make Britain the worst performer of our G7 neighbours.
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IMF: UK faces ‘vulnerabilities’
Again, these forecasts are an improvement on earlier projections but not enough to dramatically change the country’s prospects.
Weak growth combined with high inflation bodes ill for our living standards.
The Office for Budget Responsibility is pencilling in the biggest two-year drop in disposable incomes since the 1950’s.
However, it’s a complicated dynamic because efforts to stamp out inflation often inflict – and require – a period of economic pain.
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If anything, brighter than expected economic data in recent months will give the Bank of England more breathing room to raise interest rates from their current level of 4.25%.
The full effects of the previous rate rises have not yet filtered through but further rises may be required to dampen economic demand enough to bring prices under control.
Unfortunately, a policy-induced recession later in the year may be necessary.
Conservative Party leader Kemi Badenoch has called on Sir Keir Starmer to sack Treasury minister Tulip Siddiq over allegations she lived in properties linked to allies of her aunt, Sheikh Hasina, the deposed prime minister of Bangladesh.
It comes after the current Bangladeshi leader, Muhammad Yunus, said London properties used by Ms Siddiq should be investigated.
He told the Sunday Times the properties should be handed back to his government if they were acquired through “plain robbery”.
Tory leader Ms Badenoch said: “It’s time for Keir Starmer to sack Tulip Siddiq.
“He appointed his personal friend as anti-corruption minister and she is accused herself of corruption.
“Now the government of Bangladesh is raising serious concerns about her links to the regime of Sheikh Hasina.”
Ms Siddiq insists she has “done nothing wrong”.
Her aunt was ousted from office in August following an uprising against her 20-year leadership and fled to India.
Ms Siddiq is also named with her aunt in Bangladesh court documents about meetings with the Russian government.
Tory leader Kemi Badenoch has called on Sir Keir to sack the minister
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As economic secretary to the Treasury, Ms Siddiq is responsible for policy on both the City and tackling corruption.
She referred herself to the prime minister’s ethics watchdog on Monday following the reports about the properties.
On the same day, the prime minister said: “Tulip Siddiq has acted entirely properly by referring herself to the independent adviser, as she’s now done, and that’s why we brought into being the new code.
“It’s to allow ministers to ask the adviser to establish the facts, and yes, I’ve got confidence in her, and that’s the process that will now be happening.”
Police in Aberdeen have widened the search area for two sisters who disappeared four days ago in the city.
Eliza and Henrietta Huszti, both 32, were last seen on CCTV on Market Street after leaving their home on Tuesday at around 2.12am.
The sisters – who are part of a set of triplets and originally from Hungary – crossed the Victoria Bridge to the Torry area and turned right on to a footpath next to the River Dee.
Eliza and Henrietta Huszti were last seen on CCTV in Market Street. Pic: Police Scotland/PA
They headed in the direction of Aberdeen Boat Club but officers said there is no evidence to suggest the missing women left the immediate area.
Specialist search teams, police dogs and a marine unit have been trying to trace the pair.
The sisters crossed Victoria Bridge before walking along a footpath next to the River Dee
The pair were heading in the direction of Aberdeen Boat Club on the south side of the River Dee
Further searches are being carried out towards the Port of Aberdeen’s South Harbour and Duthie Park.
Police Scotland said it is liaising with authorities in Hungary to support the relatives of the two sisters.
Chief Inspector Darren Bruce said: “Eliza and Henrietta’s family are understandably extremely worried about them and we are working tirelessly to find them.
“We are seriously concerned about them and have significant resources dedicated to the inquiry.”
The sisters, from Aberdeen city centre, are described as slim with long brown hair.
Henrietta Huszti. Pic: Police Scotland
Eliza Huszti. Pic: Police Scotland
Officers have requested businesses in and around the South Esplanade and Menzies Road area to review their CCTV footage for the early morning of Tuesday 7 January.
Police added they are keen to hear from anyone with dashcam footage from that time.
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