The Spring Statement – a disappointment for businesses and the public

GBP

Yesterday Rishi Sunak unveiled his Spring Statement – an announcement investors have been eagerly awaiting.

Much like the rest of the world, inflation in the UK has been high for a prolonged period of time. The latest CPI data came in at 6.2% for the month of February, ahead of the forecast 6% and up from last month’s 5.5%. To summarize, this was the highest inflation reading the UK has seen since 1992.

Investors and consumers looked for guidance from the Spring Budget as they combat recent price pressures and an increased cost of living. Much to their disappointment, the Chancellor confirmed that April’s National Insurance hike will go ahead – adding the funds were needed to support the NHS. Sunak did however raise the income threshold at which NI was paid from £9,600 to £12,570.

Fuel duty was cut by 5p per litre in a bid to ease rising energy prices. This will be in effect until March 2023.

In addition to the statement, the Office for National Statistics said inflation was now set to peak at 8.7%. Money markets have now priced in up to 130 basis points of interest rate rises for the UK, but the Monetary Policy Committee (MPC) will have to tread with caution as such significant rises in a short space of time could have a detrimental impact on the wider economy. Therefore, all eyes will be on the MPC’s statement at their next meeting.

Key announcements

08:30 – EUR – German Flash Manufacturing PMI – 57.6% vs forecast 55.
08:30 – EUR – German Flash Services PMI – 55.0% vs forecast 53.6