It is not something you hear a Chancellor say every day, not least 12 to 18 months out from a general election. Asked if he was “comfortable with the Bank of England doing whatever it takes to bring down inflation, even if that potentially would precipitate a recession”, Jeremy Hunt replied: “Yes”.
This is all the more remarkable given that recent economic forecasts from the Bank and the International Monetary Fund have suggested that Britain will avoid a contraction. However, that was before this week’s inflation figures, which showed that while headline CPI had fallen sharply, core inflation — which strips out more volatile prices — had risen to a 31-year high.
Earlier this year, it was hoped that interest rates would peak at about 4.5 per cent. Now, that figure could be as high as 5.5 per cent. The knock-on effects are worrying. Gilt yields have risen to levels last seen during last year’s ‘mini-Budget’ crisis, increasing the cost of government borrowing. This too has driven up mortgage rates, heaping further pressure on households.
The Chancellor is right that driving inflation down must be the Bank’s top priority. But with inflation appearing far stickier than first thought, the task will prove harder and the economic fallout far deeper. And every interest rate rise makes those hoped-for pre-election tax giveaways far less likely, let alone wise.
Scrap the tourist tax
The millions of tourists who flock to the capital every year serve as a reminder — were one needed — of the global reach of the city Londoners get to call home.
The latest data shows that tourists are returning to the capital to enjoy the vast array of attractions our city has to offer. Office for National Statistics figures find London attracted 16.1 million overnight visits in 2022, far more than any other UK city, although the numbers remain significantly down compared with the 21.7 million in 2019.
These are the first set of annual figures on visitor numbers since the pandemic, and they demonstrate there is some way to go before London exceeds pre-Covid tourist numbers.
And so if the Government wants to turbo-charge these numbers and the capital’s economy, it must scrap the tourist tax, which deters high-value visitors, harming not only retail but our hospitality and leisure sectors too.
A sunny break begins
The great getaway has begun — though it is off to a bumpy start if you were trying to fly somewhere with British Airways, which was forced to cancel 50 flights due to a ‘technical issue’.
However, for those restricting themselves to land-based transport and a holiday in the UK, the roads may be busy but the weather gods are set to be unseasonably friendly — at least for a bank holiday.