The UK economy grew by 0.3% in November, yet the prevailing money supply indicators strongly suggest an impending recession in 2024. A decline in M4x of over £3b. during the month, has resulted in both annual and annualised quarterly growth rates persisting in negative territory.
The demand for new bank credit continues to be lacklustre across both households and businesses. This is exemplified by the reduced borrowing levels observed in both SMEs and larger companies compared to the previous year.
In the housing sector, despite a slight upturn where new mortgage lending outstripped mortgage debt repayments for the first time in three months, and house pieces registering an annual increase in December for the first time since March, the overall scenario remains sombre.
Inflation continues its declining trend, standing at 4% in the year to December, albeit slight up from 3.9% observed in November. This is still some way above the Bank of England’s 2% target, implying that the MPC will be in no hurry to reduce Bank Rate before the second half of the year.
(John Petley)
| % annual/annualised growth rate: | ||
|---|---|---|
| M4X/M4 before 1997 | Nominal GDP | |
| 1981-2022 | 8.3 | 5.5 |
| Ten years to 2020 | 5.2 | 2.3 |
| Year to November 2023 | -2.3 | n/a |
| Three months to November 2023 at annualised rate | -2.7 | n/a |
Source: Professor Tim Congdon, Chair, Institute of International Monetary Research (www.mv-pt.org).
