![Chief economist Philip Shaw comments on inflation and the UK economy](https://oportfolio-wp-offload-media.storage.googleapis.com/wp-content/uploads/2023/01/08140041/Chief-economist-Philip-Shaw-comments-on-inflation-and-the-UK-economy.jpg)
Chief economist Philip Shaw comments on inflation and the UK economy (Source: www.ecipartners.com)
In a promotional video released today by multi-national wealth management group Investec, Chief economist Philip Shaw has claimed that he predicts that inflation in the UK will likely come down very sharply as the overall outlook of the developed world economy starts looking up.
In a one on one video interview through Investec’s website, Chief economist Philip Shaw and Senior Investment Director Ronelle Hutchinson sat down to discuss the outlook for the world economy in 2023, commenting specifically on the UK, the US and the Euro economic areas and inflation. Over the last few months we have seen a rather bleak outlook on the economy in 2023 and beyond with different people catastrophising the situation and assuming the worst. Phrases like ‘The worst economic recession in history’ and ‘Collapse of the banking system’ have previously been thrown around, but thankfully it doesn’t seem to be as bad as first thought.
“It Looks As Though A Lot Of The Developed World Will Be In A Recession”
In the video released by Investec, Shaw starts his assessment of the economy by telling the blunt and brutal facts:
“It looks as though a lot of the developed world will be in a recession including the UK, the USA, and the Euro area. The global economy as a whole should manage some growth, but this will happen relatively slowly. Perhaps a little bit above 2% growth, compared to say 3% in 2022.”
With this, Shaw has pointed out that we are clearly not out of the woods yet, and by what he will go on to say, he by no means wants to create the illusion that the economy isn’t in a bad place. He goes on to comment:
“The better news is that the banking system is in good shape now. In several economies including the UK, there is targeted support for households in the light of the energy crisis. This will help to limit any downturns.
“Inflation Remains At Multi-decade Highs”
Moving on to discuss inflation in the UK, Shaw points out that inflation is still much higher than ideally wanted and there is still a way to go before we can start to relax a bit more. He claims:
“Inflation remains at multi-decade highs, but the good news is that it has probably passed it’s peak in the majority of developed countries including the UK. Looking forward, inflation is likely to come down sharply over the next few months and years. This is partly due to energy prices flattening out after rising very high in 2022.”
Shaw’s positive outlook for inflation in 2023 and beyond is very encouraging to hear. For a chief economist whose job is to live and breath economic trends and outlooks to say that he predicts a sharp and drastic drop in inflation, this must have some weight. So what could a drop in inflation mean? Shaw wisely doesn’t overtly comment on what he thinks the economy will look like after an inflation drop, however we can infer from his positive attitude to other aspects of his interview that he is quietly confident in the future state of the economy. And so are we.
In relation to mortgages, our specialty of course, we think that the UK and going to have to acclimatise to a mortgage market where rates are between 3 and 4% rather than 1 and 2% as we have been used to over the last few years. And this is ok. It really is. 3 and 4% are not particularly high rates and compared to the state of mortgage rates at the end of 2022, this is much better.
2023 Is A Good Year To Buy
So what is our point with sharing Investec’s opinions about the economy and inflation? 2023 looks like it is going to be a great year for mortgages, buying and re-mortgaging property. A few months ago this would have been a controversial thing to say, but as we can see from Shaw’s comments, things are really looking up for the economy and things are as bad as many predicted they would be. Mortgage rates are coming down further and further, lenders are more willing to lend, and the cost of living is starting to ease up as inflation reduces. So why not have a chat with a mortgage advisor to see what your mortgage options might be in 2023. Our initial mortgage consultation with a professional is free of charge and we are happy to help. Give us a call now.