LONDON’S BUSINESS NEWSPAPER
THURSDAY’S THE NEW FRIDAY START PLANNING FOR THE WEEKEND WITH OUR GUIDE P20 THURSDAY 23 FEBRUARY 2023
ISSUE 3,939
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CITYAM.COM
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INFLATION TO ‘FALL TO 2%’ BY DECEMBER
CITY ANALYSTS RECKON LOWER ENERGY PRICES COULD SEE BANK OF ENGLAND BACK AT TARGET BY END OF 2023 JACK BARNETT INFLATION in the UK is on track to fall exactly back to the Bank of England’s target by the end of this year, according to forecasts by two top City of London economists. The rate of price increases will tumble to two per cent in the final three months of 2023, according to Pantheon Macroeconomics. By November, the firm reckons the cost of living could even tip just below the two per cent threshold to 1.9 per cent before bumping up two per cent in December. A colossal unwinding in international energy prices after they surged to record highs last summer, pushed higher by Russia’s invasion of Ukraine rocking global oil, gas and electricity prices, is poised to drive UK inflation rapidly lower this year. Bank of England economists are less optimistic about the
inflation outlook, forecasting it will more than halve to around four per cent by Christmas, still more than double their two per cent target. Separate projections by investment bank Citigroup chimed with Pantheon’s predictions. They suspect inflation is on track to slip to 2.3 per cent in November. If the pair’s bets do play out, it would unfold one of the fastest inflation declines ever, stumbling from a peak of 11.1 per cent in October. The rate has already dropped for three straight months to 10.1 per cent. Britain is on the brink of slipping
into a recession, ignited by households and businesses responding to inflation eroding their finances by cutting spending, which should put downward pressure on prices. Ten successive rate rises, approved by Andrew Bailey and the Bank’s Monetary Policy Committee, have put the interest rate at four per cent – enough to chill economic activity. The next meeting of the Committee is on 23 March. A faster than expected inflation drop is set to lower government spending on servicing the UK’s debt pile, which is nearly 100 per cent of GDP. A big chunk of the debt stock is tied to the retail price index, an old measure of inflation. Numbers from the Office for National Statistics this week revealed the UK has borrowed around £30bn less than the Office for Budget Responsibility projected, helped by a more than £5bn fiscal surplus last month.
POLITICAL FOOTBALL A new regulator on way for beautiful game MATT HARDY THE UK government will today publish a long-awaited white paper on its plans for an independent regulator for English football. The policy document will propose the introduction of a regulator tasked with stopping financial failings from occurring lower down in the pyramid, as well as a stronger owners’ and directors’ test. Fans will be given a greater say in how clubs
are run, while there will be powers to stop teams joining European Super League-style breakaways. It follows recommendations made by Tracey Crouch MP after her football governance review. “Despite the success of the sport, we know that there are real challenges which threaten the stability of clubs,” Prime Minister Rishi Sunak said. The body will cover the football pyramid. £ LEAGUE REACTION: P24
Hargreaves Lansdown boss: UK still not a nation of risk-taking investors EXCLUSIVE CHARLIE CONCHIE THE UK is not yet a nation of investors and Brits’ appetite for the markets still lags well behind the US, the chief of Hargreaves Lansdown has said. In an interview to be published
on City A.M.com today, the retail investment platform’s outgoing boss Chris Hill said investor confidence had been curtailed by historic turbulence in the past 12 months but Brits’ longer term taste for investment was still subdued. “If you contrast the UK with the US, they've got the biggest stock
market in the world, and you can see the impact [of that] on the national psyche and how they think about investing. We are moving that way, but much, much slower,” Hill said. “If you talk to a taxi driver in New York, they know about stock prices,” he added.
Hill said that financial firms were sensing a shift among Brits, however, and money managers were now looking towards amateur investors as a potentially deep pool of capital. “In the past, if you talk to the asset manager [about their] clients, it was very
much about pension funds. Whereas if you talk to them now, they recognise the power of retail money,” he said. The comments come after the investment platform reported a 30 per cent slowdown in net new business for the first half of the year last week, though profits were up.
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