10 November 2023
If you are covering the latest UK GDP figures from the Office for National Statistics, please find below a comment from Lindsay James, investment strategist at Quilter Investors:
“GDP figures today confirmed a UK slowdown that has been increasingly signalled by leading indicators in recent months, with cracks having appeared in consumer spending and business activity with a knock-on effect for labour demand. September’s data did positively surprise thanks to the UK’s strong services sector, but was not enough to offset July’s negative print and produce any growth in Q3 relative to the previous quarter. While somehow avoiding a recession this year, today’s no growth reading means the UK economy is flatlining with only 0.2% economic growth in the last six months.
“Unfortunately, for many the economic pain has only been delayed. As the Bank of England stated earlier this month that more than half of the impact of higher interest rates on the level of GDP is still to come through, the UK economy faces growing headwinds as we approach 2024. Whilst inflation data may soon provide some signs of cooling, uncertainty remains over the direction of energy prices due not only to the risk of the crisis in the Middle East expanding, but also resulting from the ongoing disruption to global gas supplies eventually feeding through to the Energy Price Cap.
“With the UK one of the closest of all advanced economies to a stagflation scenario, this leaves the Bank of England with the difficult predicament of how long they can maintain rates at this level given the increasingly apparent impact on GDP. And with 2024 very likely to be an election year, the timing couldn’t be worse for the government to be heading into what feels like a recessionary period."
