Swiss bank UBS upgraded Britain’s economic growth forecast for 2017 and 2018 on Friday.
The bank, which had forecast the economy would grow a measly 0.7 per cent in 2018, revised its projection up to 1.1 per cent. It also said the British economy would grow by 1.5 per cent in 2017.
Admittedly, these are positive numbers but at the same time they are a long way from being strong and stable.
As for why it upgraded its GDP forecast, the best UBS could say was that things “don’t look as bleak as many think”. But not everyone agrees with the UBS prognosis.
With the Budget two days away, markets are watching the Office of Budget Responsibility’s (OBR) GDP growth forecasts more closely than usual. And they’re worried. It’s not hard to see why.
Wages are lagging inflation by 0.8 per cent, retail sales have fallen for the first time since 2013 and economic growth has been sluggish this year at best. And 2018 is when the serious business of Brexit really begins.
Given the continuing uncertainty caused by Brexit, it’s hard to see how 2018 could be a better year for the economy. Which is why the UBS upgrade was a tad baffling.
Instead, many economists expect the OBR to trim Britain’s GDP growth forecasts, while at the same time lifting its Budget deficit projections.
Short of cancelling Brexit, which he is in no position to do, Chancellor Phillip Hammond takes to the Despatch Box on Wednesday with a truly unenviable task.
Somehow, he must try to argue the economy is healthy enough to maintain growth and survive Brexit, give most public sector works a pay rise and try to woo younger voters, while not upsetting older ones.
They say you can’t please all the people all the time but the Chancellor appears to be facing more pressure than many of his predecessors to do just that — and at a time when certain factions within his own party would like to see him sacked.
After a tricky start, former Chancellor George Osborne became known for pulling the proverbial rabbit out of the hat towards the end of his Budget speeches - remember the announcement of the National Living Wage?
But Mr Osborne was operating under arguably better economic circumstances. Should Mr Hammond manage a similar feat he would be a true magician. Which he may well be, as some suspect, sooner or later, he will be doing a disappearing act all of his own.