Daily Brief – UK Economy

UK Economy

For the 3 months to January, the UK economy grew 0.2% i.e. unchanged since December which means that for all Chancellor Reeves’ talk of growth, the UK economy has not moved since June last year. Before the claim can be made that this is due to the geo-political forces affecting the global economy, it should be remembered that hostilities broke out against Iran and in Lebanon on Saturday 1^st March. Expect the energy price hikes with Brent Oil still over USD100 to feed through to inflation which makes the ugly spectre of stagflation (as in stagnating growth and at the same time a rise in inflation) a reality rather than a potential threat. Sterling not enjoying all this and slumped on Friday afternoon versus USD but did better against EUR since EUR was also sharply marked down versus USD – see below.

GBP/USD 1.3235.

Big Mac Index

It’s not perfect but after 40 years and going strong, it does provide one yardstick as to the relative costs of a Big Mac in different countries across the world. The USA is the base case at USD6.12 and Switzerland is 48% above that – a position it has held for almost all the years since 1986. Czech Republic and Argentina are both 10% below. As a very basic measure Canada looks like good value at 9% below while Norway looks dear at 23% above. In summary, while it should not dictate your choice of holiday destination in 2026, you will at least have an indication of the relative costs of different countries even if you would never go anywhere near the Golden Arches.

EUR/USD 1.1422.

Pasta

Imagine being an Italian pasta exporter such as Garafolo or Molisana to the USA: before September last year, exports of all that Spaghetti, Linguine, Fettucine and Tagliatelle to the American cousins attracted no tariffs. And then: overnight a 90%+ tariff was applied by POTUS. By December that had fallen to 13%. Now the US Commerce Department has relented further on 13 different brands and dropped the tariff to 2.65%. One would imagine that planning and budgeting in Q4 2025 at those companies must have been a challenge and all for naught in Q1 2026 when the exercise would have to be re-done. Basta pasta.

EUR/GBP 0.8643.

Jersey

Not always a great source of news but on Friday afternoon, Jersey certainly did capture the headlines at least in the animal world with the news that a group of Guinea Pigs had escaped and were roaming the North Coast of Jersey – 2 males and 5 females if you are still reading. No-one has stepped forward to claim the clutch/group/herd/colony after they were rounded up near Devil’s Hole, Jersey and they have been cared for in an animal shelter over the weekend.

EUR/JPY 182.57.

Bridge Over Troubled Water

This day in 1971 at the Grammy Awards, the then hirsute duo of Simon and Garfunkel not only won Best Song for this number but also Best Record (younger readers that means vinyl) and Best Album for this piece of musical history that still resonates today despite both Simon and Garfunkel being somewhat more than folically challenged.

When you’re weary, feeling small,
When tears are in your eyes, I will dry them all;
I’m on your side. When times get rough
And friends just can’t be found,
Like a bridge over troubled water
I will lay me down.
Like a bridge over troubled water
I will lay me down.

When you’re down and out,
When you’re on the street,
When evening falls so hard
I will comfort you.
I’ll take your part.
When darkness comes
And pain is all around,
Like a bridge over troubled water
I will lay me down.
Like a bridge over troubled water
I will lay me down.

Sail on silvergirl,
Sail on by.
Your time has come to shine.
All your dreams are on their way.
See how they shine.
If you need a friend
I’m sailing right behind.
Like a bridge over troubled water
I will ease your mind.
Like a bridge over troubled water

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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