Introduces Modupe Adegbembo to discuss UK inflation and growth.
Tom Mackenzie
Modupe Adegbembo
There are still fears around inflation persistence, but not as worried as 3-6 months ago. Services inflation is still around 4%, but down from 5-6%.
Asks if data derails view of getting to 2% and if that happens by April.
Anna Edwards
Modupe Adegbembo
Sees 2.1% inflation by April, driven by government policy and base effects.
Notes easier comparisons and government mechanically bringing inflation down. Asks why she expects 75bps of BOE cuts vs. market expectation of 50bps.
Anna Edwards
Modupe Adegbembo
Expects weaker growth (closer to 1% vs OBR 1.5%) and poor labor market conditions (unemployment at 5-year high, youth unemployment at 10-year high, rising redundancies).
Asks about worrying youth unemployment, if it's cyclical or related to budget/AI.
Anna Edwards
Modupe Adegbembo
Difficult to pin exact reasons. Increase in NICs and national living wage making it more expensive to hire younger workers is a bigger impact currently.
Asks if UK's large services economy makes it more vulnerable to AI disruption and significant job losses by 2027.
Tom Mackenzie
Modupe Adegbembo
Subscribes to the view that a big services economy leaves the UK exposed and vulnerable to disruption as AI technology is embedded.
Asks how central bankers should think about potential divergence between investment/capex and rising unemployment, and if this is a 2026 story.
Anna Edwards
Modupe Adegbembo
This could absolutely be a question for 2026. The labor market is a key driver of inflation, so more slack would lead the BOE to respond to bring lower inflation later.
Notes the difficulty in predicting the sequencing and duration of AI's impact on jobs and the consumer.
Anna Edwards
Modupe Adegbembo
Agrees it's uncertain with diverse views on timing, but policymakers need to consider these risks in their decision-making.