There continue to be more mixed signals this week for the UK economy as a measure of business optimism rose to its highest level since before the Russian invasion of Ukraine, but housing market activity was shown to be 20% lower than it was a year ago.

As has been the case in most stories about the economy this year, the Bank of England is behind both headlines. The rises in interest rates that have been taking place for close to twenty months have not just had a significant effect on the headline number of home sales this year, but related trades and services have also been hit.

The optimism being shown by businesses is because there is a growing feeling that although inflation remains well above the Government’s target an end to the cycle of hikes may be in sight.

So far there are none of the telltale signs of an economy on the verge of a recession, like business failures or a significant drop in money supply, but despite the optimism there is also a degree of caution.

A prominent economist and journalist spoke yesterday of his disappointment at the collective weakness of the Monetary Policy Committee who he likened to a flock of sheep blindly following their shepherd.

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