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24th November 2022

Columbia Threadneedle: UK autumn statement: bleak times

The Bank of England, the Office for Budget Responsibility and most outside forecasters agree that the UK is on the brink of recession. The textbook response would be a fiscal stimulus. Yet the new chancellor, Jeremy Hunt, announced on 18 November the exact opposite: a major fiscal contraction with higher taxes and lower spending. His predecessor Kwasi Kwarteng’s ill-fated mini-budget was characterised as pressing down on the accelerator just as the Bank of England were hitting the brakes; we now have both the fiscal and monetary authorities hitting the brakes hard just as the economy suffers a huge headwind from higher food and energy prices. Tough times indeed.

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