### Summary
The UK government still holds a near 40% stake in NatWest bank, 15 years after the financial crisis, and this has prevented the bank from operating as a fully independent business. The UK economy has not seen the same level of recovery as the US since the crisis, and political hesitancy to sell the stake has hindered progress.
### Facts
- The UK government's stake in NatWest allows them to intervene in the bank's affairs, as seen with the recent sacking of the chief executive, Dame Alison Rose.
- Unlike the US, which has fully disposed of its bank holdings and experienced strong economic growth, the UK remains burdened by the legacy of the financial crisis.
- Progress has been made in selling down the NatWest stake, but concerns about selling at a loss have slowed the process.
- Private capital still sees the bank as dependent on the government and not a true independent business.
- The UK economy has been propped up by low interest rates, but this has led to mountainous debt, inflation, and a potential election defeat for the government.
- The UK economy is stagnant, with little real income and productivity growth.
- The government and Bank of England's focus on getting inflation back to target may induce a recession.
- The rapid rise in interest rates following a prolonged period of near-zero rates could be particularly damaging to the UK economy, which is unprepared for expensive money.
- Wage growth and inflation targets are incompatible, indicating the need for a reckoning.
- The UK's productivity problem lies in the oversized service sector, a growing public sector, and the lack of recession-induced restructuring.
- Many small and medium-sized companies have struggled to stay afloat, with the zero interest rate environment being their only support.
- Overall productivity will not increase until underperforming businesses are removed, which typically requires a recession.
### Summary
The removal of Covid-19 restrictions in New Zealand has had significant effects on the economy, including high house prices, increased debt, and inflation, although unemployment has decreased.
### Facts
- 🏠 House prices, despite a decrease from their 2021 peak, are still nearly $200,000 higher than in 2019 due to low interest rates during the pandemic period.
- 👥 Unemployment has decreased, but government debt has significantly increased.
- 📈 Inflation, measured in both the consumer price index and the food price index, has soared.
- 🪂 Tourism has recovered to about 75% of pre-Covid levels, and migrants have returned in large numbers.
- 💼 The economy has held up better than expected in 2020, with a sharp contraction during lockdowns followed by a quick bounce back.
- 🔬 Covid has accelerated the use of technology, condensing five years of progress into a short time period.
- 💰 Despite positive macroeconomic data, people's household finances have been impacted, with increased spending on essentials and adjusted wage increases that do not keep up with inflation.
- 💸 Government spending has increased and is projected to remain high, despite most Covid-related spending being finished.
- 📉 Government revenue as a proportion of GDP is forecasted to be higher than expected in 2019, leading to a larger pot of money for looser expenditure.
Please note that some information in the text may be subjective or based on the opinions of economists.
The UK economy recovered to pre-pandemic levels in the fourth quarter of 2021, earlier than previously thought, with GDP growth revised up by 0.9 percentage points to an 8.5% increase in 2021, according to the Office for National Statistics.
The UK economy has recovered more quickly from the pandemic than previously thought, outperforming Germany and other major Western industrial nations, although it still lags behind the G7 average, and there are concerns about the potential for a recession due to manufacturing struggles, sliding house prices, inflation, and strikes.
Revisions to economic data by the Office for National Statistics (ONS) have revealed that the UK economy was 0.6% larger at the end of 2021 than previously estimated, improving the country's performance relative to its peers in the G7. The revisions also highlight the impact of stockpiling in 2020 and indicate stronger growth in 2021, particularly in sectors such as wholesale trade and health services. However, while the revisions provide a more positive outlook, the UK's economic narrative remains relatively mediocre compared to pre-pandemic levels.
UK gross domestic product (GDP) fell by 0.5% in July, below expectations, with services output being the main drag on the economy, indicating a potential mild recession, and causing investment banks to revise down their growth forecasts; however, some experts still believe that the economy is growing, albeit at a slower pace.
Goldman Sachs and J.P.Morgan have revised their full-year growth forecast for the UK's GDP due to a sharp contraction in the economy in July, with JPM now expecting 0.4% expansion and Goldman Sachs projecting 0.3% growth. Economists warn of the possibility of a recession as poor economic data continues to emerge, and GDP data indicates a weakening economy.
The UK economy is predicted to continue its stagnant state in 2024, with some economists and business groups even foreseeing a recession, while others, including the Bank of England, the IMF, and the OECD, anticipate modest growth despite high interest rates and a slowing global economic outlook. Different factors, such as labor hoarding and regions bucking the trend, complicate the overall picture, but overall, a stagnant or minimally growing economy seems likely.
New Zealand's economy, which slipped into a recession earlier this year, experienced modest growth of 0.9% in June, but economists warn that the weak figures are unlikely to improve significantly due to the looming global economic downturn caused by the pandemic and supply chain disruptions. The ruling Labour Party, facing declining support in the polls ahead of the October 14 election, is also grappling with rising prices and concerns about inflation.
The UK economy has performed better than previously estimated during the COVID-19 pandemic, with growth outpacing Germany and France but lagging behind the US, according to revised official data, although households are still facing cost of living pressures.
