The UK’s 2023 is expected to be dark. It is already suffering from the pandemic and the Russia-U crisis, and inflation, which has been shown by these knock-on effects, is shaking the working-class economy. The IMF predicted that a global recession would begin within 2024, and so did the situation in the UK. The UK’s economic growth rate in 2023 predicted by the Bank of England is -1.5%. Negative growth is expected to continue in 2024. Without fully recovering pre-COVID economic levels, negative growth prospects soon mean the UK economy is not better than it was before the pandemic. The UK is the only G7 country that has not recovered its pre-pandemic economic level.Production disruptions and rising costs due to COVID-19 and energy supply and demand imbalances have pushed UK prices to a murderous level. Inflation in September 2022 was 10.1% year-on-year, and according to the PwC Economic Outlook report, in the worst case scenario, if energy rates are not frozen, inflation could reach up to 17% in 2023. The UK Budget Office (OBR) predicted that real household wages would fall due to inflation, making disposable income the lowest in a decade.
The benchmark interest rate, which exceeded 3% for the first time in 18 years to curb soaring prices, is also affecting the lives of ordinary people. One-third of British households have mortgages, with interest rates close to 0% rising more than tens of times, with interest on loans to be paid back snowballing. Making matters worse, Britain’s unemployment rate is also expected to continue to rise, adding to the difficulty in repaying loans. The Bank of England dismissed the burden of repaying ordinary people’s debts as not at a level that would hinder financial stability.Government intervention to reverse the economy is also continuing. The effects of government policies such as energy price caps, corporate liquidity support, and eased production regulations are expected to appear in mid-2023, and Treasury Secretary Jeremy Hunt said he had a clear plan to halve inflation, stabilizing the market atmosphere. However, concerns have not disappeared that a recession could come as the unstable economic situation continues to significantly reduce household consumption and shrink the economy. Heathrow Airport was also somewhat idle at the end of the year and the beginning of the year, and there was a calm atmosphere at the beginning of the year, perhaps due to the influence of the above.In the midst of a difficult economy, the UK’s industrial policy keyword in 2023 is the ‘green economy’.
The British government is implementing generous support policies for the green economy by cultivating high-tech industries to achieve carbon neutrality and actively encouraging patent-holding companies to attract investment. In particular, in order to create strategic investment attraction in industries designated as key industries, an investment office was established in November 2020 and more than 4,500 supply chain creation goals were set. Key industries designated by the UK government include financial services and fintech, as well as eco-friendly ships and carbon-free vehicles, which the UK previously has strengths.Europe is hot. It’s winter, but it was hot in France.Wow, Swiss ski resorts are closed because there is no snow. The same is true of other countries (Austria). This is how it looks this winter. Britain’s BBC said January temperature highs in Germany, France and Ukraine were broken. Baduts, the capital of Liechtenstein, is 20 degrees Celsius. Bilbao, Spain, is 25.1 degrees Celsius.In the big framework, it’s because of climate change, and it’s something to worry about, but a different perspective prevails this year. Europe is relieved. Bloomberg reported that Europe has eased its worries about the energy crisis. European natural gas prices have returned to December 2021 levels based on weekends. This inflation right now isn’t supply shock inflation. Russia’s invasion of Ukraine sent international energy prices soaring, which led to higher import prices and higher domestic prices. As the price of gas, which has been a big pillar of supply shock, falls, inflationary pressure decreases. It’s not just gas. International oil prices are also flowing. North Sea Brent crude oil, North American Texas Intermediate oil, and Dubai crude oil are all on the decline. The reason is concerns over an economic slowdown and the recent spread of COVID-19 in China. The same is true of other raw materials. People who invest will be hopeful. Thanks to the weather, the economic slowdown is actually coming… The desired price stability is approaching. This trend is also confirmed in the actual price index.Personal services are simply things like restaurant menu prices. The price of this service is ‘an indicator that continues to rise until the end of the inflation period’. To explain, first the price of energy goes up. And then the price of industrial products that use oil goes up, the price of grain goes up, the price of processed foods goes up, and so labor costs go up. After this chain of action, the last thing that rises is the price of a service such as the “restaurant menu price.”
So service prices continued to rise even after oil prices began to fall in June last year, but they have been falling every minute since the end of last year. This is a sign that prices may not go up any further.Now expectations go one step further. Can’t you think of a rate cut? Won’t the U.S. Federal Reserve System tell a pigeon-like story at the next or the next meeting? Isn’t it a situation where indicators are allowed to do that? Among these, about 1 million people gathered at the end of the year and the beginning of the year to commemorate the end of the year and the beginning of the year at Soho Street, Arc de Triomphe, and Champs-Jerry-je Street in Paris.
Armed police also showed proper control of the streets and crowds. As we know that products are displayed and sold first in the world on the streets where major luxury goods are gathered, each luxury (Chanel, Louis Vuitton, Eve Saint Laurent, Gucci, Montclier, etc.) saw the end of the year and the beginning of the year to make reservations and enter the store in line.In Britain and France, Middle Eastern rich people’s shopping and Michelin restaurants were booked about six months ago, so they couldn’t find a seat for urgent meals. Switzerland also experienced convenient transportation due to its good connection through the SBB mobile app, but it was difficult to see skiing or winter snow mountains in Interlaken and Jungfra due to the warm weather. When Austria visited Vienna like the center of culture and art, the atmosphere at the beginning of the year was bleak. However, small regional concerts and the National Museum of Natural History were diverse in exhibits as if they were the best in the world. Overall, 2023 of the four European countries was calm and I could see and feel the economy in person.
JULIE KIM
ASIA JOURNAL
