When might we see an end to the cost of living crisis?

Politics expert Dr Steve McCabe discusses the current state of the UK economy, with analysis on when the country may see better circumstances.

Transcript

00:00Well, there is no doubt that the budget has been the contributing factor to a sense of

00:06uncertainty amongst businesses, and indeed the national insurance for employers is not

00:11going to kick in until April, but many large businesses are already taking pre-emptive

00:16action, are cutting down on investment, and certainly not taking on people. This is translating

00:22into a general sense of bigger uncertainty amongst people, and indeed there are many

00:27people who believe that the Rachel Rees budget will prove to be a big problem for the Labour

00:33Party going forward, and they'll have to do some remedial damage to make sure their opinion

00:39polls start to creep up, because they're looking pretty dire at the present.

00:43When might people start to see an improvement in their financial circumstances?

00:47Very hard to say. What we can say is that interest rates are likely to come down, but

00:53of course it's probably going to be a slower rate than was being predicted a couple of

00:56months ago. Energy costs are going up. That feeds into the general cycle. Food prices

01:02are not going to come down, so I suspect that people are going to feel no better off. The

01:06only good news is that average wage rates are going up, therefore people might be marginally

01:12better off, but the general sense at the moment is that people are going to feel worse off

01:17than not better. Now of course that's a problem at the moment, but of course it becomes a

01:21political problem come the next election, which of course is what all political parties

01:25are interested in, and voters have a nasty habit of punishing the party that's in power

01:31if they feel worse off than when that party came to power.

01:35So is a recession likely in the not-too-distant future?

01:39Well remember, a recession is two successive quarters of negative growth now, because that

01:44can be very marginal, and there is a strong suspicion that may happen. This is what's

01:49known, if you like, as a technical recession. In the short term, I suspect that things are

01:53going to get worse before they get better, and the question is being asked, will they

01:57get better? And nobody really knows.