The UK economy was hit by a stagflationary shock this week as Brent crude breached $100 a barrel. Even before the Strait of Hormuz crisis, official data showed Gross Domestoc Product (“GDP”) flatlined in January, missing the 0.2% growth forecast, leaving the country vulnerable to the energy supply squeeze. The Office for Budget Responsibility (“OBR”) warned the conflict could drive inflation up to 5% by year-end, wiping out recent progress. Consequently, the Bank of England (“BoE”) is effectively cornered as Money markets are now expecting a 70% chance of a 0.25% hike to 4% by late 2026, abandoning near-term cut hopes. With manufacturing orders collapsing under soaring costs, and households delaying purchases due to inflation fears, the Monetary Policy Committee (“MPC”) must now weigh the risk of cementing a recession against a spiralling, supply-driven price shock...
Stocks featured:
Centrica, Rentokil Initial and Smiths Group
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