Living in electric dreams

2022 was the year in which energy prices soared, and as we came into the new year, there were fears of energy shortages or even the lights going out due to blackouts. As we move further into 2023, energy prices are still very much on our minds, but people will be hoping the lights will go back on at Stormont to help deal with challenges that households, businesses, the public sector and society as a whole face this year.

Bulb and shape of home on wooden background
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New Car Sales Hit a 3-Year High But Remain Stuck In The Slow Lane

Following the Russian invasion of Ukraine last February, the general direction of travel for the UK and Northern Ireland economies has been down. Consumer confidence has plunged in the wake of rocketing inflation and the evolving cost-of-living crisis. Despite this deteriorating consumer outlook, new car sales ended the year on a high – at least in relative terms. The improvement in new car sales largely reflects an easing in the supply-chain disruption that has blighted global car manufacturers since the pandemic struck. Consumer sentiment and confidence in supply-chains (shorter-delivery times) are moving in opposite directions. The steady increase in new car sales in recent months is largely linked to fulfilling orders made in Q3 and Q4 2021. Back then the cost-of-living crisis had barely begun and interest rates were still plumbing record lows. In short, consumer confidence was robust.

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A selection box of data – both good and bad

The latest NI data dump from NISRA suggests that the local economy has dodged a technical recession (i.e. two successive quarters of contraction) due to marginal growth in the most recent quarter. This was perhaps unexpected. But output edging above the contraction mark rather than below it will be of little consolation to, or consequence for, households across NI struggling to pay heating, electricity and food bills. 

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2023 to be as unpalatable as a Bushtucker Trial

This week, many will be raising a glass to the festive season as we enter the peak time for Christmas parties. But the Bank of England will be playing party pooper by raising interest rates again on Thursday for the nineth consecutive meeting. And overall, for those looking something to celebrate, the positives in the economy – locally, nationally and globally – seem to be in short supply. 

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Car sales recovery but hazardous driving conditions ahead

Prior to the pandemic, new car sales used to be a useful and timely barometer of consumer confidence. But the supply chain disruption following Covid-19 and the Ukraine-Russia war ended that. The latest month’s new car sales are, in many cases, a reflection of consumer demand and confidence prevailing in the summer of 2021. The reality of consumer confidence today is severely dampened by the omnipresent cost-of-living crisis and higher interest rates. 

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Coming back down to earth but into a different world

If we look at the last 14 years, the reality is that we have been in a bubble that has sent many things such as global property and equity prices to stratospheric levels. This bubble was created by extremely low interest rates and was pumped up further by other central bank actions including quantitative easing (QE). But now the bubble is deflating fast as interest rates rise due to soaring inflation, and we’re experiencing an extremely bumpy re-entry as we come back down to earth. But whilst we’re re-entering the higher interest rate environment of old, it is a manifestly different world.

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The kindness of strangers is wearing thin

‘Taking back control’ has gone down as one of the most effective political slogans of all time. But turning that slogan into reality has proven to be much more difficult. The UK left the EU but doing so hasn’t brought the kind of sovereignty advantages Brexiteers had envisaged. Outside the EU, the UK’s destiny is still very much tied to forces beyond Westminster. What has become very clear in recent months is that the fate of countries like the UK is closely tied to the markets and that the markets will reward or punish you in equal measure depending on how you behave. 

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Northern Ireland economy at a turning point?

Official statistics out earlier this week reported new record highs in the number of jobs. The labour market is a lagging indicator of economic activity with changes in output not impacting on staffing levels for a few quarters.  Meanwhile a trio of output surveys covering private sector services, industrial production and retail sales revealed a loss of momentum in the second quarter of 2022. However, the various surveys revealed that some aspects of the economy are clearly faring better than others. Private sector services saw activity ease (-0.3% q/q) from its’ recent peak,  with a more substantial fall occurring within the consumer sensitive retail sector. Manufacturing industry continued to expand in Q2 albeit the pace of growth halved relative to the previous quarter.  The cost-of-living crisis, the legacy of Covid-19 and the impact of the NI Protocol are very much evident in the latest figures.

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Bad medicine is what we need…

We’re well known in this part of the world for bemoaning the weather. But in recent times, it’s prices that we have been lamenting in our chit-chat with neighbours and in the pub. And that’s not surprising given the vast increases in the cost of things like gas and electricity that we have seen. To put this in context, if beer prices had increased at the same rate as gas, we’d now be paying about £40 a pint in some establishments.

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