Britain’s Chancellor of Finance Jeremy Hunt reaffirmed on Sky News on Friday that his economic priority was to fight inflation, even at the cost of a UK recession.
Asked about further tightening of interest rates by the British central bank, following figures indicating a less marked deceleration in inflation than expected in April, Jeremy Hunt stressed that “ultimately, inflation is a source of instability, and if we want (…) growth and reduce the risk of recession, we must support the Bank of England” (BoE).
The Chancellor of the Exchequer (his official title, editor’s note) takes pains to appear in tune with the monetary authorities after the panic in the financial markets during the short-lived government of Liz Truss, who criticized the policy of the Bank of England. and she released a massive budget, with no funds.
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Jeremy Hunt also spoke of the “difficult decisions I make as chancellor to balance the public accounts so that global markets can see that Britain is a country that pays off” its debts.
A message of orthodoxy since since the publication of the latest inflation figures -8.7% for April, the highest in the G7- long-term interest rates in the United Kingdom have shot up close to their peaks of the crisis generated by the government of Liz Truss.
Investors expect rates to continue to rise this year and could hit 5.5% by the end of 2023, up from 4.5% today. These increases in lending interest rates in the markets combined with the BoE’s tightening of key rates are reflected for British individuals and businesses in an increase in credit costs, particularly in the real estate sector.
The IMF forecasts growth of 0.4% for the year 2023
However, the UK economy has so far escaped recession, giving the BoE some leeway. The International Monetary Fund (IMF) announced this week that it now expects UK growth to rise to 0.4% for all of 2023, despite still anticipating a recession in its earlier projections.
In addition, Jeremy Hunt did not confirm press accounts according to which the Indian group Tata Motors, parent company of Jaguar Land Rover, is about to choose the United Kingdom to build a vast factory for electric batteries, with the help of a likely generous grant. From london. However, he assured that Rishi Sunak’s conservative government “will always do whatever it takes to ensure that (country) remains competitive.”
Source: BFM TV
