Ross Clark

The idea that we face a certain recession has been drummed into our heads for months. The Bank of England recently produced a graph showing recession lasting into 2024. Just yesterday, the International Monetary Fund repeated its assertion that Britain faces an especially gloomy 2023, with recession inevitable – while simultaneously upsetting the House of Commons Treasury select committee by refusing to testify before it.  But could the unthinkable happen? Could Britain now avoid recession altogether? The Office of National Statistics’ (ONS) first estimate for economic growth for November shows that GDP grew by 0.1 per cent – unexciting, but still remarkable given that many economists were expecting negative growth by now.

The best thing that can be said about global economic growth prospects for 2023 is that no-one is expecting very much. On that basis, hopefully, things can only get better. Over the weekend, International Monetary Fund (IMF) managing director Kristalina Georgieva said that she expects a third of the globe to be in recession, including half of the EU. That doesn’t sound too bad on the face of it. If the IMF’s predictions proved to be accurate – and the record of economic forecasting is pretty dire – it would still mean that the economy was still growing in two thirds of world. We might, yet, avert global recession. But then how often does the world as a whole sink into recession?

Unforeseen events which provoke global crises – such as Covid -- have come to be known as ‘black swans’. By the same token, the end of 2022 has just been visited by a great big fluffy white swan.     Over the past 24 hours the main benchmark for European gas futures – the Dutch Title Transfer Facility (TTF), for gas to be delivered in February – has crashed below 80 Euros per MWh, taking it below the level it was on 23 February, the day before Russia invaded Ukraine. This, in the dead of a winter which we have been warned many times could see Europe’s shivering masses rioting in response to blackouts.

We’re finishing the year by republishing our ten most popular articles from 2022. Here’s number eight: Ross Clark’s piece from May on the crypto crash. When Britain voted for Brexit, Macron boasted that Paris would eat the City of London’s lunch. It didn’t quite work out that way, with most league tables continuing to put London as the number one or two financial centre, with not a single EU city in the top ten. Emmanuel Macron's government has now announced that it has invited Binance, a crypto exchange site, to set up a European HQ in Paris. You have to ask: has Macron leapt on a bandwagon which has already started to lose its wheels?

Economic growth is the third quarter was known to be depressed, but the Office for National Statistics (ONS) has this morning upped its estimate of the retreat in GDP for the third quarter, from a fall of 0.2 per cent to a drop of 0.3 per cent. That need not be too alarming in itself – September was always going to be a difficult month owing to the period of mourning for the Queen and the extra bank holiday for her funeral. The ONS has already reported its first estimate that growth in October rebounded by 0.5 per cent. But it is the detail which is more concerning. While the service sector in the third quarter managed to inch upwards by 0.1 per cent, the production sector fell by a whacking 2.5 per cent, with all 13 sub-sectors of manufacturing falling.

After a faltering start in its programme of rate rises, the Bank of England is catching up. Today’s half-point rise in its base rate to 3.5 per cent may be relatively modest compared with last month’s 0.75 per cent rise, but it is still twice as high as any rise the Monetary Policy Committee (MPC) was prepared to inflict on the economy during the first quarter-century of its existence. The MPC has turned itself into a prisoner of the markets – if it does anything unexpected, there is likely to be trouble In the space of three months rates have now been jacked up by 1.75 per cent. That is serious stuff. It is as if the MPC has suddenly woken up and told itself: look, the whole purpose of our existence is to control inflation.

Has inflation peaked? The Consumer Prices Index fell to 10.7 per cent last month, down from 11.1 per cent in October. This follows predictions that October would be the month in which inflation peaked – so this morning’s figures from the Office for National Statistics will raise hopes that the worst may be behind us. This doesn’t appear to be a blip. The market expects this to continue for the next two years before bottoming out in 2025. There will be optimism, too, that we can look forward to a sharp fall in the CPI over the next few months as the surge in energy prices begins to drop out of the figures. Global oil prices have fallen sharply, as have wholesale gas prices.