0:00
if the chancellor was still on a high
0:01
from last week's big growth focused
0:03
speech the bank of England has just
0:05
pulled her back down to earth and for
0:07
good measure poured a bucket of cold
0:09
water over her welcome to City's week in
0:11
business with me Christian
0:16
may I hope you don't come here to be
0:18
cheered up really I do plenty of other
0:20
videos on YouTube can help you with that
0:21
but this is the place I'm afraid for
0:23
hard truths and none harder today than
0:25
the hammer blow fact that the bank of
0:27
England has slashed its economic growth
0:30
forecasts in half having previously
0:32
thought that the UK economy would grow
0:34
1.5% this year the governor Andrew
0:36
Bailey broke the news yesterday that
0:38
they now anticipate a rate of just
0:41
0.75% barely noticeable yes the bank of
0:45
England cut interest rates which is good
0:47
news for some mortgage holders and
0:48
borrowers but they did it precisely
0:50
because the economy is in the emergency
0:52
room inflation could reach 3.7% towards
0:55
the end of this year unemployment is
0:57
rising and in the restrained words of
1:00
the bank of England business and
1:01
consumer confidence has declined since
1:03
last October's budget in the runup to
1:06
that budget cam warned that the
1:08
government's miserable Doom and Gloom
1:10
tone you remember that would spook
1:12
businesses and consumers and of course
1:14
it did investment decisions were
1:16
deferred expansion plans put on hold
1:18
there was a palpable nervousness right
1:20
through September and October and the
1:22
consequences of that became clear in
1:24
November's growth figures just .1% and
1:27
we'll get December's data next week then
1:29
the budget is itself reigned tens of
1:31
billions of pounds of new taxes on
1:33
businesses along with a mountain of
1:35
additional costs and as what was feared
1:38
became real employers across the country
1:40
began to react survey after survey has
1:43
shown us that firms began this year by
1:45
letting staff go by cancelling
1:47
investment passing on cost increases
1:50
we've been through this every week I'm
1:51
afraid now you know the picture by now
1:54
and just this week we got the latest
1:55
data from the manufacturing and services
1:58
sectors of the economy and it's not good
2:00
and now of course the bank of England
2:02
has totted up all this misery and
2:04
concluded that the economy is basically
2:06
not going to grow this year so growth is
2:09
stagnating and inflation is lingering
2:11
now there's a word for this and it's not
2:12
a pretty one stagflation a disastrous
2:15
State of Affairs now we're not in it yet
2:18
but we can certainly see it on the
2:19
horizon and the question is can we avoid
2:21
it well we know that the government is
2:23
going to have to take some dramatic
2:25
decisions next month once the OB the
2:27
Watchdog of the government's tax and
2:29
spending plans publishes its own
2:31
assessment of growth in the year ahead
2:34
economists fully expect them to conclude
2:36
that thanks to high borrowing costs and
2:38
poor growth Rachel Reeves has lost her
2:39
so-called fiscal Headroom basically how
2:42
much room she has to spare in order to
2:44
stay within her self-imposed uh Ironclad
2:47
rules regarding the public finances now
2:50
after the budget this Headroom was
2:51
around1 billion pound but the thinking
2:53
now is that it could in fact have turned
2:55
into around minus 20 billion in other
2:58
words a black hole 20 billion pound
3:01
black hole in the public finances well
3:03
wherever we heard that before the last
3:04
time the chancellor claimed to have
3:06
found one left over by the previous lot
3:09
she said about launching a 40 billion
3:10
pound tax raate on businesses so will
3:13
she do that again she says not that she
3:15
hasn't exactly promised not to and this
3:18
brings us back to whatever dramatic
3:20
action is is expected in March once the
3:22
OB shows its workings how will the
3:25
chancellor balance the books so she
3:27
banked on economic growth uh but her
3:29
policies have destroyed that so spending
3:32
cuts or tax hikes how about spending
3:34
cuts in the spring followed by tax hikes
3:36
in the Autumn well our latest monthly
3:39
poll of Voters carried out by freshwater
3:41
strategy reveals that the public are
3:43
wise to this risk with a majority now
3:45
expecting hikes to corporation tax
3:47
income tax and vat during this
3:49
Parliament that same poll of the general
3:51
public not just of CC readers revealed
3:54
that 70% of people have no confidence in
3:56
the government's economic policy and a
3:58
very similar number have no confidence
4:00
chancellor but there's another option
4:02
for Rachel Reeves cancel the deeply
4:05
damaging tax Rises and Regulatory
4:07
burdens due to kick in over the next few
4:09
months recognize that the situation has
4:11
changed the economy isn't able to Bear
4:13
the burden right now blame Trump if you
4:16
want I don't care blame the Tories if
4:17
need be but find a way out of the mess
4:20
that has been made now I've said this
4:23
before of course growth in the future is
4:25
great build those houses build the roads
4:27
and the runways build the nuclear power
4:29
station another great policy announced
4:31
this week but if the government persists
4:33
with its growth destroying policies in
4:35
the here and now then it's not crazy to
4:38
ask what exactly are these future power
4:40
stations going to power now I genuinely
4:43
want to sit here one week and talk about
4:44
something else believe me but the
4:46
economy and the government's
4:48
mismanagement of it is pretty much the
4:49
only show in town right now and it
4:51
matters hugely and we will cover every
4:54
Twist and Turn of it meanwhile of course
4:57
life goes on and the weekend is very
4:59
nearly here so I hope you have a great
5:01
couple of days and I'll see you next
5:02
week the paper's back on Tuesday of
5:04
course and cityam app and website will
5:07
keep you up to date and in the know 24/7
