With Sunak in charge, how long before Britain can get back on a path to growth?

There will almost inevitably be a recession next year, and the medium-term fiscal statement will be sorry stuff, writes Hamish McRae

What is worth noting is the market response to the appointment (AP)

The markets gave a warm welcome to the arrival of Rishi Sunak as the UK’s new prime minister, but whether the electorate will do the same hangs on a thread. There’s not much point in crawling over the fiscal numbers now – how the £40bn black hole in the government’s finances will be filled, if that is indeed the number. We will learn more about all that next Monday with the fiscal statement, which will be sorry stuff.

What is worth noting is the market response to the appointment, with 10-year gilt yields now around 3.6 per cent, whereas last Friday they went over 4 per cent. True, back in August, the rate was below 2 per cent, but rates have risen everywhere. The UK can now borrow more cheaply than the US and Italy, though it has to pay more than Germany or France. That will take a little of the heat off the surge of borrowing costs for everyone, including anyone having to take out or roll over a mortgage.

But this modest improvement does not change the reality that rising interest rates worldwide, plus the energy problems in Europe, plus the chips shortage, plus everything else means that there will almost inevitably be a recession next year. That is what the new PM was referring to in his first speech when he said that the country faced a “profound economic crisis”.