Markets have continued to hold up reasonably well as we approach May – not that there has been much in the way of positive news for investors. Inflation here remains stubbornly high – in contrast to many of the other major economies. Retail sales have been held back by the inclement weather we suffered in March and even the financial sector has returned to the headlines in a concerning way.
The revelation that Credit Suisse had suffered an outflow of deposits amounting to more than £50 billion goes a long way to explaining why this once major player on the European banking scene was forced to succumb to a takeover by its larger rival, UBS. Fortunately, this particular crisis does not appear to have wider implications, though the news that the US based bank, First Republic, had seen over $100 billion withdrawn in the wake of the Credit Suisse debacle, equivalent to 40% of its deposit base, demonstrates just how fragile confidence is in this sector.
The news that Prezzo is to close a third of its restaurant is an indication of the pressures this sector of the economy is facing. Aside from the residual effects of the pandemic, rising energy and food costs has rendered many of its outlets unprofitable. It is little wonder that Prezzo’s private equity owners are seeking to reduce costs.
As for inflation, economists blame the tighter labour market here in the UK for our cost of living failing to fall as swiftly as elsewhere. With inflation coming down much faster in the US, as an example, our experience does not bode well for settling the numerous industrial confrontations that the government is facing. And geopolitical uncertainties remain as an unsettling background to what could otherwise be interpreted as an improving economic background.
On the plus side, it seems that the government has been borrowing less than had been expected. While the amount of debt so far accumulated is worryingly high, it does appear to provide the Chancellor of the Exchequer with a little headroom to either cut taxes or increase spending ahead of the next General Election, which is less than two years away.
In May, of course, we have the Coronation of King Charles, which the hospitality industry hopes will give a welcome boost to trade. Indeed, we have three Bank Holidays next month – half of the remaining total for the rest of the year, two of which will take place at Christmas. While it is not necessarily guaranteed that Bank Holidays increase consumer spending, one leading pub group has stated that they have high hopes that sales will benefit from the Coronation in particular. We clearly need to celebrate our new monarch in style.