Xiao Kui, the company’s chief economist, was concerned that Jeremy Hunt would exaggerate tax cuts in his next budget.
She said: “The biggest unexpected factor in our forecasts for the UK and beyond is that they deliver before the election.
“Fiscal policy remains an upside risk to our outlook ahead of a potential election at the end of the year.”
Hunt hinted that further tax cuts were likely after £20bn giveaways were announced in November.
UK inflation fell significantly from a 41-year high of 11.1% in October 2022, but rose slightly in December to 4%.
“If there is one country that we believe will need a recession to bring inflation back under control, all other things being equal, it would be the UK given the significant damage it has suffered from the historic shock of Brexit and then the pandemic and financial crisis,” Ms Cowie said. “The war in Ukraine.”
Data from the coming months will be crucial in determining when the Bank of England can start cutting interest rates from their highest level in 16 years.
But for the Conservatives, which trail Labor by 27 points in the polls, the Budget on March 6 represents one of the last chances to revive poor ratings. It is believed that the elections will be held in the fall or winter.
Pictet expected the British economy to suffer from weak growth in the first half of the year, followed by a “modest recovery” as Election Day approaches.
Ms Cowie added that the UK was facing a “typical case of stagflation”.
The warnings about the risks that fiscal policy and elections pose to Britain’s future prospects come with half the world’s population heading to the polls in 2024.
In the United States, Joe Biden is expected to face a rematch against Donald Trump in November.
Pictet warned that Trump’s potential return to the White House is also a major concern.
“If Trump comes back, as is very likely, and comes with tough tax cuts, we may have a Liz Truss moment in the United States,” Pérez Ruiz said.
He added that Pictet was only investing in US government debt for up to five years for this reason.