Published: 11 November 2022
By Suzanne Evans, Director, Political Insight
The British economy shrank by 0.2% in the three months to the end of September, leaving the UK on the brink of recession. The latest estimates from the Office for National Statistics suggest production output fell by 1.5% in July-September, the fifth consecutive quarter of contraction, while manufacturing output slipped 2.3%. Construction grew 0.6%. Services were flat. GDP fell particularly sharply in September, by 0.6%, due to the impact of the additional bank holiday for Queen’s funeral, when most businesses were closed. Responding to the data, chancellor Jeremy Hunt said: "I am under no illusion that there is a tough road ahead, one which will require extremely difficult decisions to restore confidence and economic stability. But to achieve long-term, sustainable growth, we need to grip inflation, balance the books, and get debt falling. There is no other way". He added: "While the world economy faces extreme turbulence, the fundamental resilience of the British economy is cause for optimism in the long run".
Chancellor Jeremy Hunt is said to be examining freezing day-to-day public spending in real terms for three years after 2025 in the Autumn Statement on Thursday, to save about £27bn a year by 2028, the Financial Times reports.
London stocks closed higher yesterday after weaker-than-expected inflation data from the US. The FTSE 100 ended the session up 1.08% at 7,375.34, while the FTSE 250 added 3.9% to sit at 19,377.24. The pound also rose 2.65% on the dollar at $1.1659, and 1.17% against the euro to trade at €1.1479.
The Department of Labor (sic) reported the annual rate of increase in consumer prices declined to 7.7% in October from 8.2% for September. At the core level, the consumer price index (CPI) slipped to 6.3% from 6.7%. Economists had forecast increases in the year-on-year rate for headline and core CPI of 8.0% and 6.6%, respectively. The S&P 500 and the Nasdaq rallied, racking up their biggest daily percentage gains in over 2 ½ years, as the news sparked speculation the Federal Reserve might become less aggressive with interest rate hikes.
The latest YouGov-Centre for Economics and Business Research (CEBR) consumer confidence index fell in October to its lowest level since April 2020, declining to 94.7 from 97.7 in September, falling for the third month in a row and marking the fourth-lowest score in the index's 10-year history. The index for confidence in house prices over the last 30 days slumped to 115.4 in October from 124.8 the month before, while the index for the outlook over the next 12 months dropped to 109.1 from 120.4. The gauge for the outlook for finances over the next 12 months improved to 45.5 from 43.0, but that remained the worst score in the overall index by some distance and marked the 14th consecutive month the score was negative. However, pessimism over household finances was the biggest contributor to the overall decline in the confidence index, falling over the past 30 days to 55.8 from 56.6, the second-worst score for the measure (which has never seen a net positive score) on record.
Data from the Office for National Statistics (ONS) suggests Britain is in the grip of a mental health crisis that is causing workers to drop out of the labour market and fuel staff shortages. The number of people neither working nor seeking work has ballooned since the pandemic to almost nine million, driven by long-term sickness and, in particular, mental health conditions, the ONS says. Levels of economic inactivity among the long-term sick jumped by 537,500 - around 25% - between the year to June 2019 and the year to June 2022. Some 454,300 of those can be attributed to mental health conditions, such as depression, stress and anxiety in those aged 16 and over. Although the increase in long-term sickness started in 2019, before the pandemic, it rose sharply by 363,000 between early 2020 and the three months to the end of August 2022: long-term sickness was the reason given by 28% of people who were neither working nor looking for work during that time, up from 25% at the start of the pandemic. A recent report by the professional services firm Deloitte found that the annual costs to UK employers of poor mental health have increased by 25% since the start of the pandemic, as measured in levels of absenteeism, productivity, and turnover. Separate ONS data showed that Britain is trailing behind almost all OECD nations in its post-Covid labour market recovery and is on track to become the only major developed country with employment below pre-pandemic levels at the start of 2023. Before the pandemic, Britain had very high employment rates by historic and international standards, Reuters says.
Tens of thousands government workers have voted in favour of taking strike action over pay, pensions and redundancy terms, the Public and Commercial Services (PCS) union says. An average of 86.2% of its balloted members voted for industrial action, the PCS said, the highest percentage vote in the union’s history.
Some 600 workers at Liverpool port, one of Britain's busiest, are to end strike action begun on 19th September, having agreed a pay deal with employer Peel Ports. The Unite union said workers had voted "overwhelmingly in favour" of pay rises worth between 14.3% and 18.5%.
Drivers working for 12 train operators will strike on 26th November in an ongoing dispute over pay, the Associated Society of Locomotive Engineers and Firemen (ASLEF) union says. Members at Avanti West Coast, Chiltern Railways, CrossCountry, East Midlands Railway, Great Western Railway, Greater Anglia, London North Eastern Railway, London Overground, Northern Trains, Southeastern, Transpennine Express and West Midlands Trains are to walk out.
Heathrow airport says its passenger numbers in October reached 84% of pre-Covid-19 levels, supported by a rise in travel during the half-term break and a gradual return of business travellers. It had a plan that would not require any capacity cap, as it works with airlines and ground handlers to prepare for the Christmas peak, Heathrow said, adding that that it is on track to get back to pre-pandemic employment levels before the peak summer holiday period in 2023.
In his first mass communication with employees, new Twitter boss Elon Musk said that he could not rule out bankruptcy at the social media giant if it fails to boost subscription revenue to offset falling advertising income. He has set a target that the new Twitter Blue subscriptions service should account for half the company's revenue, after last week, announcing that Twitter will charge users $8 a month (£6.99 per month in the UK) for blue check marks to verify the authenticity of a user's account. Musk has also carried out his threat to stop Twitter employees working from home, telling employees who survived last week's extensive staff layoffs they are expected to be in the office for at least 40 hours per week, Bloomberg reports.
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