12 January 2024
If you are covering the latest UK GDP statistics, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“The UK economy grew by a modestly positive 0.3% month-on-month in November, up from the unexpected 0.3% contraction seen in October. This uplift in November is just enough to bring the UK economy back to flat growth over these two months, but it leaves an awful lot of pressure on the December figures as even a slight downward turn would result in the UK entering a technical recession after Q3 GDP was revised down to a fall of 0.1% at the end of last year.
“This morning’s figure shows just how precarious the situation is for the UK economy and piles yet more pressure onto the Bank of England to cut interest rates. The Bank has managed not to tip the UK into a recession to date, but it is looking increasingly likely that its luck may be coming to an end.
“Growth, though positive in November, is still relatively weak and interest rates are clearly biting. While you might argue the recent drop in inflation leaves the Bank with a considerably less daunting task in terms of steering inflation back to its 2% target this year, there are global headwinds and we saw inflation notch up in the US. Whether the Bank gives in and starts cutting rates sooner than it might have originally liked remains to be seen.
“Economic conditions are incredibly tough, and the UK faces a real challenge when it comes to avoiding recession as we move further into the winter months. The UK is currently on the cusp, and continued weak growth or even contraction cannot be ruled out.”
