Wishful thinking about Hunt's announcement of economic 'soft landing' | Business news

Most economists would hesitate before describing Britain's situation as a „soft landing” but on the brink of a general election, the chancellor was at pains to insist there was a positive outlook.

By Ed Conway, Economics and Data Editor @EdConwaySky

Wed 17 Apr 2024 22:59, UK

It wasn't a mission-accomplished moment — the equivalent of the day in 2003 when George W. Bush stood on an aircraft carrier and preemptively declared the Iraq war over.

But still Declaration of Jeremy Hunt In our interview in Washington DC, he said he had reached a „soft landing” on the economy, and of course there is wishful thinking about that.

Economists spend their time dreaming that, following a crisis or series of crises, they can create a slow glide path, making sure there is no painful economic disaster. However, this rarely happens in reality.

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In the case of the UK, most economists would hesitate to describe Britain's situation as a „soft landing”.

After all, the economy is still systematically in recession. At best, GDP is flat.

Factor in population growth, and it's shrinking quarter after quarter.

Yet the chancellor was at pains to emphasize today that, in fact, the outlook is surprisingly positive.

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Of course, that belief comes just like him Preparing for the elections Economics is likely to be central to this.

According to the opinion poll Conservatives are headed for a decisive loss, and the lack of an economic „feel good factor” doesn't help.

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If so, one can understand why he wants to portray a strong economy.

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Yet look at the data, and it's hard to share his optimism.

With interest rates still at 5.25% and inflation still above target, the crisis facing households has rarely eased in recent years.

According to the latest International Monetary Fund forecasts, the UK is expected to grow at a slower rate than any other G7 economy this year.

But the president did not cling to hope alone.

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Here in Washington, most central bankers and finance ministers quietly hope that all the economic and military challenges they face — from war in Ukraine and the Middle East to China's tensions with the United States — should not crystallize into one more dire and all-encompassing.

They, like Jeremy Hunt, will continue to talk about soft landings.

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