Another year has passed but the difficulties facing the UK economy continue to make for grim viewing.

This should be no great surprise.

We have a UK Government that has failed so spectacularly over more than 13 years to deliver widespread economic prosperity.

And policies which might fuel growth remain conspicuous by their absence.

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Under Chancellor Jeremy Hunt, we have a continuation of that narrow-minded austerity that arrived at Downing Street back in 2010 with David Cameron and George Osborne. It seemed inconceivable before that 2010 general election that the ensuing savage austerity programme, involving terrible welfare cuts, would be supported by then leader of the Liberal Democrats Nick Clegg, yet it was.

This might seem like ancient history but it remains highly relevant.

Ordinary households have been laid low by many years of austerity, including a clampdown on public sector pay. And, across the board, falling real-terms pay has been something of a hallmark of the Conservatives.

Workers had to endure protracted real-terms pay decline well before the inflation crisis started to blow up more than two years ago.

And the inflation crisis we have seen has put incredible pressure on households and businesses.

Annual UK consumer prices index inflation hit a 41-year high of 11.1% in October 2022.

The UK’s inflation woe, which it is crucial to emphasise has been much worse than that seen in many other countries, has of course also led to households and businesses being burdened by much higher borrowing costs.

The Bank of England’s Monetary Policy Committee has hiked UK base rates from a record low of 0.1% in December 2021 to 5.25% in its drive to fight inflation.

Some have questioned whether the MPC has gone too far given much of the effect of the surge in rates has probably yet to feed through, with huge numbers of people coming off fixed-rate mortgages.

Brexit, of course, continues to weigh heavily on the UK economy in terms of skills and labour shortages, much higher food prices, and woe for exporters, to name just some of the effects.

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On Brexit and interest rates, former MPC member Danny Blanchflower wrote in The Herald in June: “Brexit and its devastating impact on supply chains, especially for food, is what sets the UK apart from every other country. This can't be fixed by rate rises.”

And Mr Blanchflower, Bruce V. Rauner ’78 professor of economics at Dartmouth College in New Hampshire in the US and a visiting professor at the University of Glasgow, had this to say about the Tories’ austerity programme when he visited Glasgow in June: “What has it done ultimately? It has killed poor people. To be frank - ultimately it is that.”

He noted austerity served “no economic purpose at all”.

And he said of the Bank of England and its MPC: “How can you raise rates with a forecast that says you should be cutting rates? They are out of their minds.”

At that stage, UK base rates were at 4.5%.

Decisions on interest rates, after so many years when they were entirely uncontentious, have become ever more controversial in recent times.

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This is no surprise, given the pressure households and businesses are under.

It is difficult to shake the notion that people are paying a particularly heavy price for the Tories’ economic ineptitude.

Brexit, for example, has fuelled inflation and dampened growth.

The last thing anyone needs in very difficult times is additional self-inflicted damage. Yet we have had just that.

Back in the spring, Office for Budget Responsibility chairman Richard Hughes summed up Brexit’s effect as follows: “We think that in the long run it reduces our overall output by around 4% compared with had we remained in the EU.”

It has been interesting, given all of this, that Labour leader Sir Keir Starmer has chosen to embrace Brexit.

As we look forward to 2024, it seems like it will be more of the same on the economic front for now.

We will probably be hearing a lot more claims and counter-claims as the Conservatives and Labour warm up for the next general election.

The economic backdrop is going to remain dismal.

Recession fears are very much to the fore.

Data from the Office for National Statistics on December 13 showed UK gross domestic product fell 0.3% month-on-month in October.

Then the ONS on December 22 revised third-quarter data to show a 0.1% fall in GDP, rather than stagnation. It also now calculates the UK economy stagnated in the second quarter, rather than growing by 0.2% as it estimated previously.

The numbers speak for themselves.

Thomas Pugh, economist at accountancy firm RSM UK, said in the wake of the October GDP data: “The big picture is still one of a stagnating economy. We doubt growth will materially pick up until towards the end of next year, meaning that the spectre of recession will hang over the UK economy for a long time yet.”

Recession is defined as two consecutive quarters of falling GDP.

Martin Beck, chief economic adviser to the EY ITEM Club think-tank, said following the December 22 revisions to GDP data: “October's decline in GDP, the growing drag from past rises in interest rates, and industrial action holding back activity in some sectors mean the economy in Q4 is likely to flatline at best, with a technical recession a serious possibility.”

Against this backdrop, the setting of interest rates will likely become even more contentious.

As has been the case for years now, we must prepare for the worst and hope for the best.