13 December 2023
If you are covering the latest UK GDP statistics, please find below a comment from Lindsay James, investment strategist at Quilter Investors:
“UK GDP fell 0.3% month-over-month in October, down from 0.2% in September and missing estimates, piling the pressure on the Bank of England ahead of Thursday’s interest rate decision. While no rate cuts are expected tomorrow, or for some time, it will be crucial to see how the BoE is monitoring economic growth going forward and what that might mean for the path of interest rates. Calls for rate cuts are likely to grow stronger should this sort of economic data persist.
“Services in the UK has always been the strongest part of the economy, but this month it has driven the fall in GDP as a result of information and communication services struggling. If the UK is to avoid recession it is the services sector that is likely to prevent it, so seeing such a sharp fall on the month will be cause for concern.
“With GDP growth over the last rolling three month period also flat, economic conditions in the UK are clearly tough as we work through the winter months. The BoE will be hoping it can muddle through so its higher for longer narrative can persist, but how long this can continue remains to be seen. This may be a fairly backward looking data set, given it is for October, but it will remain a crucial one to watch as we enter 2024. The Bank of England has done a good job not tipping the UK into recession to date, but interest rates are biting now and further contraction cannot be ruled out. It could be a while before things get better again.”
