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Hello from London, where it appears Rishi Sunak’s honeymoon with investors may truly be over as the outlook for inflation and growth darkens for an economy that’s already lagging behind the other G-7 nations.

While investors gave Sunak credit for stabilizing the situation after his ill-fated predecessor, recent reports showing stubbornly strong wage growth and prices — are

, Philip Aldrick and Srinivasan Sivabalan write. The next two weeks will be pivotal in shaping the outlook: BOE Governor Andrew Bailey, who speaks in France on Sunday, will appear the next day alongside the chancellor at Mansion House in The City.

Jeremy Hunt will use the speech to announce new capital market rules to try to increase the attractiveness of post-Brexit financial services. Bloomberg reporters this week broke the news that the effort will likely include

from insurers to invest in startups and fast-growing companies and

of an EU rules that forced firms separate the cost of investment research from trading expenses. 

Consumers are sharing investors’ pessimism. Interest rates may hit 7% and trigger a “hard landing” in the economy to quell inflation, according to JPMorgan Chase, and house prices may be starting to tank. Home prices are falling at

since 2011, a report from Halifax said, while Zoopla said that almost 40% of homes have

since late 2022. 

It’s not just mortgagees who are struggling though, the government is too. The Treasury sold £4 billion of gilts but only by offering a 5.668% yield,

for debt in 16 years. Money spent on debt servicing is money not spent on public services — such as the NHS or tax cuts eyed by Sunak.