RUTH SUNDERLAND: A dash of Christmas cheer

Optimism was out of fashion in 2022. After two years of Covid and lockdowns, the perceived threat of the virus began to recede, only to launch Putin’s war on Ukraine and the cost of living crisis.

Those of us who like to look on the bright side when we’re having a hard time.

But is there reason to hope that next year will be better? The answer is yes, with luck. Analysts at Deutsche Bank have even gone so far as to publish a Christmas special listing reasons to be in a good mood.

Reason to celebrate: The analysts at Deutsche Bank have even published a Christmas special

First, economists believe inflation is likely to have peaked. In the UK, it fell to 10.7% in November from 11.1% in the previous month – still terribly high but heading in the right direction.

It’s only one month’s worth of data, but there’s reason to believe it’s not just a flash in the pan. Global oil prices have fallen significantly, as has the cost of refueling at the pump. Putin’s ability to weaponize oil and gas has been limited as Britain and other European countries have sought to reduce their dependence on Russia.

Nonetheless, inflation is a persistent and insidious enemy. Putin has begun to ramp up his aggression in ways that are exacerbating the energy crisis, and there could always be another shock lurking in the financial system.

The impact of China emerging from its Covid freeze is a great unknown when it comes to global inflation. It will certainly be a while before we get close to the bank’s 2 percent target.

But as Deutsche Bank analysts note, there has been an improvement in global supply chains that has largely gone unnoticed.

There are some signs that the UK’s recent labor shortage may be easing. Some of the nine million or so Brits who are “economically inactive” are returning to work, including those in their fifties who took early retirement in lockdown.

When it comes to the labor market, we are not in the 1970s, without underestimating the misery caused by the rail, postal and nursing strikes.

According to the German figures, today’s industrial action is “pale compared to the 1970s and 1980s”.

Despite Mick Lynch’s antics, unions are a far less powerful force than they were 40 years ago, when the workforce was overwhelmingly male and industrial. Interest rates are crucial for the housing market.

Despite the positive signs for inflation, Bank of England Governor Andrew Bailey, along with his Fed counterparts Jay Powell and ECB Christine Lagarde, remain cautious. They were too slow to react to inflation in the first place and may now be wrong in the opposite direction.

The mini-budget made for a day of celebration for the Gloom traders. Whatever one might think of the ill-fated Truss-Kwarteng experiment, the Bank of England has restored stability and averted a crisis in the bond market. In other words, the system worked.

Amid the turmoil, some of our flagship companies continue to create jobs, win large orders and boost exports. BAE Systems signed a landmark deal with Italy and Japan this year for a new fighter jet that could win export orders in Asia.

City rule reforms will free up big investors to pour billions into infrastructure, and the idea of ​​the London Stock Exchange being eclipsed by Paris is for the birds.

The UK faces huge problems, but let’s not forget that we have huge assets. Merry Christmas.