Choose your website and language
Daniel Richards - MENA Economist
Published Date: 16 March 2023
The UK’s Chancellor of the Exchequer, Jeremy Hunt, unveiled his budget yesterday afternoon, the UK’s first in 18 months. Some key points included the extension of the energy price guarantee at GBP 2,500 until July, and a confirmation that the corporation tax rate would be raised from 19% to 25% in April, although firms will be able to offset investment against their tax bills. The Chancellor also announced the creation of 12 investment zones in eight different areas of the country, with each one backed by GBP 80mn, in order to drive the governemnt’s levelling up agenda. Extra funding will be available for childcare as the government seeks to boost the workforce but there was nothing about pay for public servants, many of whom have been striking in recent months. A fuel duty freeze will be maintained. The annual tax-free allowance for pensions was raised from GBP 40,000 to GBP 60,000 while the lifetime limt was scrapped. In terms of forecasts, inflation is predicted to come down to 2.9% by year-end and while the UK might avoid a technical recession of two consecutive quarters of contraction, GDP over 2023 would be 0.2% smaller than in 2022 according to the ONS.
US retail sales contracted 0.4% m/m in February, in line with expectations. Meanwhile, the January figure was revised up from 3.0% to 3.2% growth. Stripping out petrol and autos, sales were flat m/m. Eight out of the 13 categories measured saw a fall in spending. Sales at restaurants and bars fell 2.2%, suggesting that the persistent price rises in the services sector are starting to weigh on expenditure, in a potentially positive signal for the Federal Reserve. Another positive indicator for the Fed came from a fall in the producer price index, which dropped 0.1% m/m, compared with expectations that PPI inflation would come in at 0.3%. Core PPI was flat m/m.
Markets were roiled by more unease in the banking sector yesterday as Credit Suisse came under pressure when regulatory issues prevented backer Saudi National Bank from providing more support. Later in the day the Swiss central bank and the regulator provided a statement saying that there would be emergency funding available if necessary and that ‘Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks.’ The bank will borrow up to CHF 50bn from the Swiss National Bank.
Sheikh Khaled appointed as Abu Dhabi crown prince
US consumer confidence ticks up despite banking sector turmoil
UAE GDP growth expected to reach 3.9% in 2023
Evidence of economic resilience in UK retail sales
Monthly Insights - March
Fed goes for a dovish hike