Economy

UK economy set to shrink next year, Hunt says in budget speech

Published

2 years ago

November 17, 2022

LONDON — Britain’s economy is forecast to shrink next year, finance minister Jeremy Hunt said as he began outlining how he and Prime Minister Rishi Sunak will raise taxes and cut spending to repair the public finances, despite the grim outlook.

The new forecast is for gross domestic product to contract by 1.4% next year compared with a projection for growth of 1.8% in the previous outlook published in March by the Office for Budget Responsibility (OBR).

Since then, Britain’s economy has come under strain from an inflation rate now above 11%, a slowing global economy and political and severe financial market volatility during Liz Truss’s brief term as prime minister.

Hunt said the OBR forecasts laid out “starkly the impact of global headwinds on the UK economy” as he started a speech to parliament on Thursday.

The OBR forecast gross domestic product would grow by 1.3% in 2024 and by 2.6% in 2025, Hunt said, compared with its previous forecasts for growth of 2.1% and 1.8% respectively.

Hunt and Sunak have said they will restore investor confidence in Britain after the failed “Trussonomics” experiment with unfunded tax cuts that sent the pound to an all-time low against the U.S. dollar, threatened chaos in the housing market and forced Truss to quit after just 50 days in Downing Street.

Hunt said the OBR judged that Britain – where high inflation is creating a cost-of-living crisis – is already in recession. It is the only Group of Seven nation yet to recover its pre-pandemic size, having previously suffered a decade of near-stagnant income growth.

Hunt had warned of more pain in his budget statement in the days leading up to Thursday’s announcement.

He has said he can only slow the rise in borrowing costs if he can show investors that Britain’s 2.45 trillion-pound ($2.91 trillion) debt mountain will start to fall as a share of economic output.

Critics have warned against a return to the kind of tight controls on spending pursued by the ruling Conservative Party for much of the past 12 years, saying it will hurt already stretched public services and the lives of millions of households, deepening the expected recession in the process. (Writing by William Schomberg; editing by Catherine Evans)

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Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

19 hours ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

2 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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Economy

Statistics Canada says manufacturing sales fell 1.3% to $69.4B in August

Published

2 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.

The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.

The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.

Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.

Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.

Overall manufacturing sales in constant dollars fell 0.8 per cent in August.

This report by The Canadian Press was first published Oct. 16, 2024.

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