In response to the news that the US is considering banning imports of Russian oil, which means that commodity prices will probably be higher for longer, we have raised our CPI inflation forecast and will soon cut our UK GDP growth forecast. To reflect the risks, we also illustrate an alternative “worst-case” scenario in which inflation is even higher and GDP growth slows by more. One crumb of comfort is that in both situations the Chancellor has the fiscal space and the scope to boost borrowing to cushion the hit to households’ real incomes.
Drop-In (8 March, 10:00 EST/15:00 GMT): We’re discussing Russian energy imports and Europe’s energy needs in this special 20-minute briefing on one of the big sticking points in the western response to the war in Ukraine. Register here.
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