The Telegraph, February 26, Roger Bootle
The economy seems to be at an inflection point. Of course, we must always beware of taking things for granted, especially when the geopolitical situation in Ukraine remains in the balance and there are further worries concerning China and Iran.
But there were two notable bits of good news last week.
The first was the flash PMI survey, which showed strength in the economy in the month of February. This was followed by some very good figures for public borrowing in January, which posted a surplus of over £5 billion, in contrast to the markets’ expectation of a deficit of almost £8 billion.
The size of this surplus owed much to the strength of tax revenues, which was probably a reflection of surprisingly strong economic activity, bolstered by the favourable revenue consequences of high inflation.
Can the economy continue to hold up? Superficially at least, it looks as though consumers have a considerable war chest to sustain their spending over the coming year. Relative to the pre-pandemic trend in their savings, they have some £200 billion more to hand. But this doesn’t take account of inflation.
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