During the late Queen Elizabeth II era, the UK experienced significant changes in its society, politics, and economy. That said, how is the British economy now, and what can be expected after the Queen’s era? Here’s Chief Economist of Juwai IQI, Shan Saeed’s take on the matter.
Queen Elizabeth II’s reign
The beloved Queen’s legacy prevails and the monarchy will stand the test of time. The UK’s population rose by around a third during the Queen’s 70-year reign.
The post-World War II baby boom significantly contributed to this. Other significant changes in the UK were greatly contributed by the commonwealth immigration, the introduction of contraceptive pills, more women joining the workforce, and increased immigration from Europe as the EU.
Queen Elizabeth II ruled the UK alongside her family with diligence but was resistant to radical change. Now the question is if King Charles III, known for his methodological approaches and environmental viewpoints, will be more ambitious in bringing about change.
Having said that, Shan Saeed mentioned beyond the monarchy, the UK experienced inflation that surpassed 10 percent this July; the British economy recovered from the COVID-19 crisis in 2020 slower than the US and the Eurozone.
He further stated that the UK economy might struggle to make a turnaround next year as inflation is high.
Higher UK Household Electricity Price
According to The Guardian, Goldman Sachs predicts a 22% inflation hit in January 2023. The investment bank further states that inflation could exceed 20% if the UK energy price cap increase by 80% in January, despite the baseline prediction calling for an increase of only about 15%.
In an effort to control inflation as rising gas prices drive up UK energy costs, the Bank of England announced its largest increase in interest rates in 27 years at the beginning of August, raising the UK base rate to 1.75%, a 13-year high.
This would result in a nationwide blow to families and businesses, with millions struggling to cope with rising bills and the imminent closure that businesses are forced to endure.
Source: Financial Times
Housing Market is on the Rise
In terms of the UK housing market, Halifax and Barratt Developments speak of challenges ahead in the new year.
The average prices for UK homes are taking a downturn, while international investors flock back into the market as the British pound continues to plummet.
Halifax further mentions that foreign investors continue to drive the market, with over 85k homes in London owned by internationals. As international investors continue to profit from the UK real estate market, the combined value of these properties has reached an astounding £45.3 billion.
Thus, with investments going down, no governmental support, and the decline in both import and export trades, it is no wonder the UK GDP is at an all-time low.
This begs the question – will inflation ever go down? The answer is bleak, but one thing for sure is our endurance as we pedal from one pier to another amidst diluvial waters, anticipating the answer that would hopefully resolve it.
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