00:00Does the UK still have an inflation problem?
00:02So I do think there are still fears around inflation persistence.
00:05But I think you can also say that we're not as worried as we were maybe three to six months
00:10ago.
00:10Even looking at the inflation numbers for services, they are still around 4%.
00:14So they're high, but they're nowhere near the kind of 5%, 6% they were a few months ago.
00:19So I think those fears are coming down.
00:20And the fact that we know that inflation is going to come towards 2% as well in April
00:25also gives us some comfort that inflation expectations and some of these other elements
00:29that may have been more worrying are also coming down.
00:31So to be clear, none of the data today derails your view that we get to 2%.
00:34No.
00:35And you think that happens by April?
00:37Yeah. So I see that happening by April.
00:39So our exact forecast is 2.1% for April.
00:42And of course, a lot of what is doing the heavy lifting is government policy
00:46and the fact that base effects that were price rises last year
00:50are dropping out of the annual comparison,
00:52but nonetheless bringing prices back towards target.
00:55OK. Good morning to you, Majupé.
00:56So we're getting easier comparisons and we're getting the government
00:59basically mechanically bringing inflation down in some places, aren't we?
01:03And you expect 75 basis points of cuts in 2026.
01:07I think the market is expecting 50.
01:09So what is it that you see that allows the Bank of England more space to cut this year?
01:13Yeah, I think it's coming from two main sources.
01:15So the first is that we expect growth to be weaker.
01:17The markets are currently seeing them.
01:20Actually, when you look at what the OBR were expecting for the UK growth,
01:23it's around 1.5% for the next couple of years.
01:25We think it's a lot closer to 1% and actually probably slightly lower in that sense.
01:30So we think growth is weaker than expected.
01:32But the second factor is that we think looking at the labour market,
01:34the labour market conditions are not doing well right now.
01:37We saw unemployment move to a five-year high and youth unemployment is at a 10-year high.
01:42So all of those metrics are not looking good.
01:44And the forward-looking metrics as well, so for example, looking at redundancies,
01:49are also not great.
01:50So that's telling us that we see more adjustment in the labour market
01:53and we see more slack emerging as well.
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