The UK Inflation Genie is Out of the Bottle

I'm a natural optimist and don't wish to upset anyone's Boxing Day celebrations. Any commentator worth their salt, though, at times like this, should ignore such sensitivities. It would be wrong – reckless, in fact, given the slew of recent bad data – to fail to point to the worrying mix of economic issues the UK now faces.

During 2011, the British economy will suffer from rising inflation and sluggish (in some quarters, possibly negative) growth. This grim combination will be set against a budgetary situation that can only be described as ghastly.

George Osborne was recently in New York, soaking up plaudits for boldly leading Britain into fiscal austerity at a time when, apparently in contrast, America's feckless political elite has allowed the national debt to balloon. The problem is that UK austerity, so far at least, is a myth.'

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