It all went horribly wrong last year with war in Ukraine, an energy shock, the cost-of-living crisis, rising interest rates and a string of strikes by nurses, immigration officers, postal staff and railway workers.
September saw the country on the brink of financial meltdown, as the UK gilt market went haywire after former Chancellor Kwasi Kwarteng’s disastrous mini-Budget.
The UK had four chancellors, three prime ministers and two monarchs in the space of four tempestuous months.
Shares and bonds crashed, house prices wobbled and the economy slipped into recession.
So it’s hardly surprising that the nation has assumed the brace position, anticipating another car crash year in 2023.
Yet there are signs that we are past the biggest bumps, and the country could keep its collective wheels on the road. So let’s not be too gloomy, despite the ceaseless rain, Brexit frustrations and wall-to-wall Prince Harry.
The winds of change have started to blow in the right direction in recent weeks, as Vladimir Putin’s evil war founders, natural gas prices drop to pre-Ukraine war levels, inflation shows signs of easing, and hopes grow that interest rates will soon peak.
This morning we woke to the news that the UK economy grew by a surprise 0.1 percent in November, instead of shrinking 0.3 percent as expected.
This has raised hopes that a recession could be shallower than expected or avoided altogether, according to Alice Haine, an analyst at Bestinvest.
“There is optimism in the air as oil and gas prices ease, and energy demand declines due to the current mild winter,” she says.
Investors are ahead of the game as ever, with the FTSE 100 index of blue-chip UK stocks jumping more than three percent this year.
The pound is on the mend.
Last September, at the height of the gilt crisis, it slipped to just $1.08 but today stands at $1.22, a rise of 13 percent and there could be more to come.
The great British consumer is down but not out, with retail sales jumping 6.9 percent in December, compared to the same month in 2021.
Mortgage rates are falling.
In comparison to almost every recession I can remember, there is little unemployment.
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I don’t want to overdo this. We still face a host of problems.
Household energy bills have yet to fall in a meaningful way, inflation is at a 40-year high and wages can’t keep up. The economy may still shrink in 2023. The tax burden is at a 70-year high.
Industrial action rumbles on, the NHS is at breaking point and Harry and Meghan just won’t stop.
Interest rates may rise a little higher before they start falling, putting pressure on the housing market.
Yet it’s important we don’t overdo the gloom.
The UK economy has not entered a death spiral. At some point interest rates will peak. Property shortages should prevent a crash.
Falling energy prices will save the government tens of millions of pounds in support under the Energy Price Guarantee.
Ukraine is winning with the help of British weapons and Putin is now seen as a liability by his allies.
There’s a long way to go, but at least we have seemed to have stopped digging a hole for ourselves.
I just wish I could say the same for Harry and Meghan.