Most UK data points this month have pointed to one inescapable conclusion: recession. That was compounded this Wednesday with the release of inflation figures that, for the fourth month in a row, were worse than expected. The news, followed by a larger than exepcted interest rate increase from the Bank of England, effectively confirmed fears that base rates will peak somewhere around the 6 per cent mark.
Of course, it was only six or seven months ago that an economic contraction was seen as similarly inevitable. That reckoning has been avoided so far in 2023. In the UK, as elsewhere, the overall economic situation has not yet proved quite as bleak as first suspected.
There is a chance that this latest bout of pessimism could also be overdone. Some straws to cling to: rising mortgage rates will have a staggered rather than an immediate effect, many homeowners are mortgage-free, and there are signs that a combination of rising wages and even higher savings rates are giving disposable incomes a fillip in the short term.