The UK faces a race against time to be able to compete with the rest of Europe when petrol and diesel vehicles are phased out beginning in 2030.

The ability of the country to compete over the production of electric vehicles was handed a potentially fatal blow as Britishvolt, a start-up which carried British hopes to be at the forefront of European battery technology, collapsed into administration with its entire workforce made redundant.

The UK now only has one factory producing the power units for electric cars, and that is Chinese owned and is in partnership with the Nissan factory in Sunderland.

Battery manufacturing facilities are springing up all over Europe, and the UK is far behind it. Industry sources were voicing their concerns yesterday that with it taking five years from concept to manufacture, the country realistically has a two-year window before it loses the ability to compete in the automotive sector.

This sector employs around a quarter of a million people across the entire spectrum of vehicle production and spare parts.

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The long-predicted recession in the UK economy is still considered likely, even after the growth that was recorded in November. All that has happened is that it has been deferred for a single quarter.

In order for a recession to have begun in the fourth quarter of last year, activity would have had to virtually collapse in December. Although there will have been a hit for the industrial action that has been widespread across the public sector, its effect will be seen more in the current period.

It was reported yesterday that despite interest rates rising at every MPC meeting since December 2021, there is a significant disparity in how much borrowers are being charged by major lenders and credit card companies, compared to how much savers are being paid on deposits.

Since depositors have not seen a return on their savings in a decade, they are no longer savvy in searching out the best deals and have simply left funds in non-interest bearing accounts.

At the next MPC meeting which takes place on February 2nd, there is unlikely to be any change in monetary policy unless there is a major surprise in the December inflation report which is being delivered tomorrow.

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The data for GDP that was released late last week confounded markets that had seen very little cause for redemption for the UK economy following a year that was characterized by negativity at just about every turn.

Political upheaval, industrial action, inflation and Brexit each conspired to provide an expectation of weakness and recession for the economy. However, there was one bright spark in the final quarter of the year, provided by the FIFA Men’s World Cup, which took place in Qatar.

While the performance of the England team was fairly predictable, the tournament gave a healthy boost to the economy and allowed it to show a surprising level of growth and activity at a time of year that often disappoints.

The UK economy grew by 0.1% in October, boosted by significant activity in the hospitality sector and video game sales. It had been expected to contract by 0.2%.

While the country is far from out of the woods yet, the data reduces the chance that a recession has already arrived in the final quarter of the year. The surprising level of growth seen in December means that the economy will need to have shrunk by 0.5% to record a technical recession, in which the economy contracts for two consecutive quarters.

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The Bank of England, its hands full dealing with rising prices while trying to stave off the worst effects of the coming recession, is not in a position nor does it have the mandate to create any policies that are specifically designed to create greener financial markets.

Andrew Bailey is in accord with the Chairman of the Financial Reserve in believing that Central Banks are not arbiters of their own destiny, despite their desire to be given the independence and autonomy to work within broad guidelines.

The Managing Director of the IMF, Kristalina Georgieva welcomed the plans put in place by Chancellor Jeremy Hunt having been greatly concerned by the approach of his predecessor Kwasi Kwarteng.

However, Ms Georgieva believes that the UK is going to face a sobering 2023 as it faces potential crises on several fronts.

In a statement that was delivered by the Parliamentary Treasury Select Committee, she told MPs that she believes that the fiscal plan is adequate to deal with the effects of battling inflation while protecting household incomes during a recession that in the main has been created by the energy crisis that is ongoing.

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Data released this week has shown that productivity in the UK economy is the lowest in the entire G7. The wave of strikes that took place throughout the fourth quarter of 2022 and are ongoing will do nothing to improve that statistic.

One of the most important sectors of the private sector of the economy is housing. House building as well as sales of existing property makes up around 7% of GDP. The sector is also an accurate barometer of the health of the economy.

Over the past ten years or so, existing house prices have seen an unprecedented period of steady growth as inflation has remained low along with interest rates. Mortgage providers were able to offer very generous deals, and the vast majority of home loans were of fixed terms for extended periods.

Suddenly, following Brexit and the Pandemic, the picture has changed. Virtually an entire generation has had to come to terms with turmoil in the market. As their fixed rate deals expire, suddenly the Building Societies and other lenders have withdrawn the majority of the products they were offering, leaving them borrowers high and dry having to pay significantly higher floating higher rates.

This has had the effect of deterring existing borrowers from deterred from moving, while first time buyers have suddenly seen lenders demanding larger deposits and other less favourable terms.

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The long-predicted recession in the UK economy appears to have started in the fourth quarter of 2022. Data released so far, consumer spending in the country in December rose by an average of around 5% while inflation remains apparently anchored above 10%.

While bricks and mortar outlets performed adequately over the period between Black Friday and the Holiday period, it was online purchases that took the biggest hit.

Uncertainties created by the strike by postal workers discouraged people from buying online, although major courier firms only reported a marginal fall in activity.

The Bank of England has predicted that the recession will continue for the entire year and given the potential crisis facing the public sector there are those that see very little growth before the General Election which is scheduled for no later than two years from now.

Over the past fifty years, there have now been three Parliaments that have lasted in excess of more than ten years.

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In an interview yesterday, Huw Pill, the Chief Economist of the Bank of England, reiterated his belief that short-term interest rates in the UK will continue to rise as the Central Bank remains committed to bringing inflation under control.

He went on to say that he and his colleagues on the Monetary Policy Committee see inflation as potentially the most serious danger facing the economy and although fuel and energy prices appear to be moderating which will see headline inflation fall, there remain a number of areas, like accommodation rents that are rising at a record pace. This will see core inflation continue to raise concerns.

Pill affirmed the commitment of the MPC to fulfilling its mandate to return inflation to its 2% target. This is the core commitment of the Central Bank, and it is prepared to do whatever is necessary to achieve this.

The global economy is coming out of a long period of supportive monetary policy and all G7 Central Banks have a shared commitment to fight inflation, although the causes of higher prices vary as do the methods other than monetary policy used to reduce it.

There are common themes like the war in Ukraine that have driven prices higher over the past year that have conceded with the end of the Pandemic, although the infection rate in China and its withdrawal of travel restrictions are still a concern.

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The Prime Minister, appearing on weekend TV, provided what the head of the Royal College of Nursing called a chink of optimism, by confirming that the Government will meet with the representatives of nurses and ambulance crews to talk about pay.

There remains some confusion about whether Sunak was referring to the pay award for this financial year, which has already been put to, and agreed, by the independent pay and rewards body or the next financial year which begins in April.

Representatives of nurses confirmed that strike action would only be suspended if the talks include this year’s award.

The Government is clearly on the back foot as waves of industrial action sweep through the public sector, with junior doctors and teachers currently going through the balloting process.

There are no signs of a thaw in relations with railway workers, who have caused misery and havoc with their strikes, which look set to continue for several weeks and possibly months.

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Jeremy Hunt, the Chancellor of the Exchequer, announced the additional payments that will be available to the lowest paid and recipients of certain benefits in the new financial year, this week.

The cost-of-living element will be one thousand pounds paid in three installments spread throughout the year. The subsidy to assist with the cost of energy will also remain in place.

This has cost close to eighteen billion pounds in this financial year, but is likely to cost less in the next as although the energy cap is being raised, meaning that the average household bill will rise from the thousand five hundred pounds to three thousand pounds, the wholesale cost of gas has fallen, and it is estimated that the average bill will be two thousand eight hundred pounds.

Sir Keir Starmer, the Leader of the Opposition, set out his alternative plan for the country yesterday and while it was generally well received it fell short of announcing what the Labour Party would do to repair the economy were it to be elected in the next General Election.

Starmer tried to show that his Labour Party is electable and can provide a genuine alternative to the Conservatives, who will have been in power for fifteen years by the time of the next election. Gone are the internal squabbles of the Corbyn leadership and the dominance of the left-wing trades unions.

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The Prime Minister provided a keynote New Year speech yesterday in which he made three promises but felt unable to place a time limit on any of them.

He vowed to cut the inflation rate in half, reduce NHS waiting lists and grow the economy. This is obviously a wish list for any Prime Minister, but he was painfully devoid of any details as to how his goals will be achieved.

To reduce NHS waiting times, he will need to produce more doctors, nurses and hospital beds. Currently, the NHS is losing staff despite a pledge to recruit 30k more, while in order to deliver the 7k new beds that have been promised by his health minister, they will need to expand the recruitment exponentially. This could take a revision of his refusal to consider a Swiss style agreement with the European Union that could allow health workers to be recruited.

In order to grow the economy, tax cuts will be needed, but there has been no indication of this happening from his Chancellor. Jeremy Hunt met with business leaders yesterday to explains the Government's plans to provide support to them during the next financial year.

This sounds more like a package of emergency measures rather than a plan for growth. There is little prospect of a positive quarter of GDP before the final quarter of this year, and that is only a very remote chance.

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