Demand is weak and investment’s faltering. That’s OK then

The government is hoping low inflation will keep the electorate from getting restive. But it will only be achieved thanks to feeble consumer and public spending

As the nation's shoppers turn their thoughts to Christmas, a dark cloud looms. Could it be that rising inflation will spoil the party? Only a few weeks ago, Theresa May, Philip Hammond and the rest of the cabinet could have been forgiven for worrying about the impact of inflation after most economic forecasters predicted it was about to send shop prices sky-rocketing. And, worse, more of the same is expected next year, with rising prices eating into disposable incomes to more than halve Britain's GDP growth rate.

In recent days the news has been better. Comments by Hammond and Brexit minister David Davis holding out the possibility of a more accommodative stance towards the European Union have pushed up the value of sterling against the dollar and euro and cut the chances of a much more expensive festive period.

Continue reading...