STEPHEN GLOVER: Suddenly the economic clouds are lifting...
Daily MailCould Rishi Sunak turn out to be a luckier Prime Minister than almost anyone has imagined? Item one is the growing consensus that interest rates, which were raised to 4 per cent last week, are unlikely to go up beyond 4.5 per cent, and should start to drop as inflation falls. This is what Huw Pill, the Bank of England’s chief economist, said last Friday: ‘Interest rates are not as high now, and are not expected to go as high, in part because inflation is lower, but in part because the turmoil in markets last autumn has passed through the system.’ Item two is the mortgage war, which has led to some five-year, fixed-rate mortgages dipping below 4 per cent for the first time since last October. 'I hope they have the courage and good sense to ignore any advice from the Treasury that they should wait until inflation has been conquered before stimulating the economy through the judicious cutting of taxes' Most notable is the recent prediction by the International Monetary Fund that, alone among the world’s leading economies, Britain is likely to slide into recession this year, with a predicted contraction of 0.6 per cent. This implies that if the Chancellor undoes his tax hikes, and the Bank of England goes easy on interest rate increases, we won’t tip into recession.