13 March 2024
If you are covering the latest UK GDP statistics, please see the following comment from Lindsay James, investment strategist at Quilter Investors:
“Figures from the Office for National Statistics this morning show the UK rebounded in January with monthly GDP estimated to have risen 0.2% in January 2024 following a fall of 0.1% in December 2023, though on a three-month basis it declined 0.1% compared with the three months to October 2023. This return to growth suggests the UK is already on course to soon be pulled out of the short and shallow recession it entered in the second half of 2023.
“While the 0.2% uptick represents just one month of data, after a better start to the year for the services and construction sectors, it could represent the start of a slightly more positive period for the UK given some of the challenges facing the economy are beginning to ease. Inflation is expected to fall in the coming months, due in part to a lower energy price cap which could help alleviate the pressure on UK households and support the recovery of the consumer-driven economy. With this in mind, alongside this morning’s GDP figure, the UK inflation print next week will be closely watched by the Bank of England ahead of its interest rate decision the following day.
“For now, economic conditions remain relatively tough and GDP in January was still 0.3% lower than the same month a year ago. The recent budget highlighted the tightrope that the government must walk in balancing the growing needs of departments with the desire to lower taxes, leaving little scope for fiscal stimulus. This therefore leaves the Bank of England under pressure to soon play its part in driving economic growth by cutting interest rates. This slight uptick in monthly GDP does little to reduce that pressure, but we can expect it to stand firm for a while longer yet.”
