15 November 2024
If you are covering the latest UK GDP figures, please find below a comment from Lindsay James, investment strategist at Quilter Investors:
“With the budget now firmly in the rearview mirror and the Chancellor reinvigorating her message of growth with the Mansion House speech, today’s quarterly GDP figures highlight the malaise the UK still finds itself in. Despite good momentum early this year, growth has stumbled once again, growing just 0.1% over the last three months, with September actually seeing a contraction. Much of this will have been as a result of the gloomy messaging that was persistent in the run up to the budget, causing consumers and businesses to pause spending and await what pain was to come.
“However, it is now not as simple as just getting back on trend. There are rising risks to the UK economy as businesses are being asked to stomach much of the required fiscal expansion. Unemployment figures have ticked up to 4.3% and with NI changes yet to fully bed in, businesses are warning things could get worse. The economic malaise we have become accustomed to could be here to stay a while longer.
“Now there are things that Labour is doing to stimulate things alongside its tax rises. Planning reforms should eventually help while it has got the right idea by focussing on infrastructure investment as step one in improving the productivity of the economy. The only problem is if a consolidated pensions system is the way to do this or if there are more efficient ways to bring in private investment.
“Finally, there is a large cloud on the horizon for the economy in the shape of Donald Trump. Thankfully for the UK it may well be quite insulated from his proposals to slap tariffs on just about every and any good made outside of the US. UK firms predominately export services rather than goods to the US which might see them protected from tariffs to a greater degree despite the US being our biggest export market. It could also lead to strengthening trade with the EU as well as retaliatory measures, so the UK may just be protected enough that GDP is not hit badly. However, as is Donald Trump’s style, the UK will need to prepare for the unexpected.”
