The economy grew in July according to figures released yesterday but is still seen as contracting overall in the third quarter.

The period of mourning, whether official or unofficial, will almost certainly mean that there will be contraction this month and there is nothing to suggest that August was anything other than average.

The Bank of England believes the economy will fall into a technical recession, where there are two consecutive quarters of contraction, or negative growth as economists prefer to call it. This will be followed by an ever-increasing slowdown that will last for the whole of next year.

The country will truly experience stagflation as a recession will be coupled by a level of inflation which is already considerable but will become significantly worse. There is likely to be large scale industrial action as the workforce demand wage increases that are keeping pace with rising inflation but employers struggling to keep costs down as the recession starts to bite will be unable to comply.

Liz Truss has been rather overtaken by events during her first week as Prime Minister. She has been forced to abandon her desire to hit the ground running, although she has found the time to provide support to help with the cost-of-living cruises.

The Monetary Policy Committee meeting that was scheduled to take place this week has been postponed and put back a week as the nation mourns the death of Queen Elizabeth II.

The meeting now due to take place on September 22nd is expected to hike rates possibly by seventy-five basis points as inflation continues to rise. The latest figures for CPI will be released on Wednesday, with headline inflation likely to have reached 10.5%.

It is hoped that the announcement by the government of its plans to provide support for consumers by limiting the rise in the energy price cap to £2,500 for an average family will see inflation top out sooner than has been predicted recently.

The rise next month in the energy cap has been halved which will come as a major relief to the lowest paid, while any proposed increase in 2023 has been shelved. It is unclear if this package has been fully costed by it is expected that the cost will be around £90 billion pounds.

It was a momentous week in the UK with the end of the second Elizabethan era with the passing of the Queen. On Tuesday, she had welcomed her fifteenth Prime Minister and the third female.

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The new Prime Minister remained true to her word and introduced a support plan for domestic consumers. The plan means that no one will pay more than £2,500 a year for their energy for the next two years.

The plan, which will cost between ninety and a hundred billion pound to implement, is expected to add to pressure for higher interest rates.

The new Chancellor of the Exchequer, Kwasi Kwarteng signalled a change to the relationship the Government has with the Bank of England.

Governor Andrew Bailey had expressed his concern recently about the continuing independence of the Central Bank. Although that independence will be supported, there will be greater oversight from the Treasury.

The Chancellor and Governor will meet twice a week to ensure that they still are on the same page and there is more coordination between monetary and fiscal policy.

Bank of England Governor Andrew Bailey, making his quarterly report to MPs yesterday, said that there is nothing that the Central Bank can do to avoid the country slipping into recession in the fourth quarter of this year and not seeing any growth in 2023.

He claimed that it is not the Bank of England’s monetary policy decisions that have created the crisis, but Russian President Vladimir Putin’s invasion of Ukraine which has driven up the price of basic foodstuffs together with his actions over energy supply.

While the UK isn’t dependent on Russian gas to the same extent as, say, Germany, the economy is still energy dependent.

The new Prime Minister, Liz Truss, will today flesh out the Government’s plans to deal with the rising cost of energy. It is expected that the energy cap will be frozen and around £2,500 for the next eighteen months for domestic suppliers.

Little has been said about businesses, whose energy bills have risen by a multiple of three or even four over the past year.

Liz Truss took office yesterday as the country’s new Prime Minister, with the rallying cry of together we can ride out the storm.

She announced the most senior roles in her Cabinet, and it was clear that she intends to reward those who have supported her in the campaign, Boris Johnson stalwarts like former Deputy Prime Minister Dominic Raab and Party Chairman Grant Schapps have been discarded while there are significant promotions for Kwasi Kwarteng and James Cleverly, who become Chancellor of the Exchequer and foreign Secretary respectively.

In her first speech as Prime Minister, she promised to tackle the cost-of-living crisis precipitated by the rising energy bills, head on and rebuild Britain from the ground up.

Her three main priorities will be cutting taxes, a permanent solution to the energy crisis and sorting out hospital waiting lists as part of an overhaul of the National Health Service.

She starts work today with a baptism of fire as she faces Keir Starmer across the dispatch box in Prime Minister’s questions. It will then be back to working on the plans to supply help for those most affected by the energy crisis.

Liz Truss was voted in as the new Leader of the Conservative Party when the result of the poll was announced yesterday. She received 57% of the vote, comfortably beating her rival Rishi Sunak.

Despite her margin of victory being decisive, the race was close that had been predicted by opinion polls. In fact, it was less decisive than either Boris Johnson’s or David Cameron’s.

Today, Boris Johnson will officially resign as Prime Minister and Truss will be invited by the Queen to form a government. The announcement of her Cabinet will then begin, with the most senior posts announced later this afternoon.

One person who will not be a member of Truss’ first Cabinet will be Johnson Loyalist, Priti Patel, who resigned yesterday and decided to return to the back benches. She wouldn’t have been retained in her role as Home Secretary, so in fact jumped before she was pushed.

Once her ceremonial duties are out of the way, she will immediately begin to tackle an economy which is overflowing with issues that require her immediate attention, as well as that of her new Ministers.

Members of the Conservative Party have chosen their new leader. The result of the Ballot will be announced at lunchtime.

There will be little time for celebration for the winner as they get straight down to work on the issues facing the country.

Inflation is currently at 10.1% and is expected to reach 20% as the energy crisis worsens. Rishi Sunak or Liz Truss will be expected to put measures in place to alleviate the suffering, with several charities seeing a choice for some families between heating their homes and feeding themselves,

It is expected that whoever is chosen as leader will announce a package of measures within two weeks of taking office,

Truss, the overwhelming favourite to become the next Prime Minister, showed a degree of naivety recently when she commented that it is the job of the Bank of England to control inflation.

A combination of stronger yields in the U.S. risk aversion and the prospect that inflation could reach 23% early next year saw Sterling fall to a fresh two-year low.

Boris Johnson goes into his final weekend as Pr4ime Minister convinced that there are sufficient reasons to believe that the country can survive and thrive, despite the pressures that are building within the economy.

It has been a feature of Johnson’s Premiership that he has been infected by an almost blind optimism, when forward-thinking and planning would have served him far better.

If the voting members of the Conservative Party want forward-thinking, they will, or at least should, cast their vote for Rishi Sunak. The former Chancellor is pragmatic about the current situation and is honest enough to say that the country faces serious concerns in the short term.

He accepts that there is no quick fix nor is there, to quote Johnson’s predecessor, Theresa May, a magic money tree.

Sterling is suffering from the country’s economic prospects, as traders see the Bank of England being helpless to halt the seemingly endless rise in inflation. It feels like almost every day there is a further prediction of a quite incredible rise in inflation, with the latest being 25% early next year.

With activity, particularly in the manufacturing and industrial sectors, slowing alarmingly, the new Prime Minister will take over at what could be a historically critical time.

Liz Truss or Rishi Sunak will be expected to announce new policies to ease the cost-of-living crisis, with figures published yesterday showing that the latest increase in the cost of living will push a further three million families into poverty.

Parliament returns from its summer break next Monday, the day on which the result of the Conservative Party leadership contest will also be announced. Without having confirmed whether she will agree to further direct help for consumers,

It is rumoured that Truss wants to pass targeted payments to those most in need, while Sunak believes that help should be available to all to get on top of the issue at once before winter arrives.

U.S. investment bank Goldman Sachs has gone even further than its Wall Street rival Citibank in predicting that inflation in the UK could reach 22% next year.

Last week, Citibank made a prediction that price rises in the UK could top 17% but Goldman believes that the energy crisis could push inflation even higher with the Bank of England helpless to bring it back under control.

The hospitality sector, which is only now recovering from the battering it took during the Pandemic, is facing further devastation with its trade body writing an open letter to the Government yesterday pleading for assistance with the warning that pubs and restaurants could be forced out of business as they face up to 400% increases in utility bills.

There is no energy price cap for commercial enterprises, so the sector faces the full force of the continued rise in gas prices.

The letter went on to say that owners are now unable to pass on increases to their customers, as they will lose up to 80% of their business. Already faced with their own fears over energy cost, consumers are unlikely to spend an evening in a pub or restaurant if prices rise out of hand.