ECONOMISTS PREDICT MILD UK RECESSION

New analysis by Bloomberg Economics predicts that the UK’s economy shrunk in Q3 2023, signalling a 52 per cent chance of a mild recession in the second half of this year, ahead of official GDP figures being released on Friday. Last week’s forecasts by the Bank of England had suggested that the UK economy remained stagnant during Q3.  

Falling demand is attributed to weaker household spending, lower business investment and falling government consumption, according to Sanjay Raja, Deutsche Bank’s Chief UK Economist (City AM). Meanwhile, Capital Economics predicts a larger 0.2 per cent quarterly contraction due to “the growing drag from higher interest rates”. 

CHANCELLOR URGED TO REDUCE TAXES IN AUTUMN STATEMENT 

Jeremy Hunt is facing calls from Conservative colleagues to cut taxes after new figures from the Resolution Foundation revealed that government revenues had increased by an estimated £15 billion this year (The Times).  

The chancellor is expected to have £13 billion of fiscal headroom, double the £6.5 billion he allowed for at the March budget (The Telegraph).  

However, the think tank warned that higher inflation would feed into government costs after the next election (Reuters). Treasury sources have highlighted the risk of fuelling inflation and insisted the chancellor will take a cautious approach. 

NEWS IN BRIEF

FTSE 100 companies are due to spend a record amount on share buybacks this year, according to AJ Bell (City AM).  

Mortgage lending is to reach its lowest point in a decade in 2023 and 2024, according to the EY ITEM Club Outlook for Financial Services (i news).  

Labour plans to give consumers using Buy Now Pay Later services the same protections as if they were using credit cards (The Times).  

Rishi Sunak is expected to announce new legislation mandating annual North Sea oil and gas licensing rounds, using the King’s Speech on Tuesday (Financial Times).  

Elon Musk has unveiled a new AI chatbot, Grok, which will be made available to premium X subscribers after testing (The Guardian).