12 June 2024
If you are covering the latest UK GDP statistics, please find below a comment from Lindsay James, investment strategist at Quilter Investors:
“The great British weather can be thanked for today’s poor GDP figures, as persistent rain has kept consumers from spending and caused economic growth to grind to a halt for the month with no growth registered. With rainfall in April 55% higher than average and the wettest April since 2012, it is perhaps no surprise to see the economy struggle as a result, with sectors such as retail, construction and pubs all severely impacted.
“Whilst the weather has thankfully improved of late, likely boosting May’s reading, the second quarter is off to a slow start and has a lot of catching up to do if it is to match the 0.6% growth seen in the first quarter. However, despite this renewed slowdown, it will likely not be enough for the Bank of England to cut interest rates next week. Wage inflation remains elevated and consumer price inflation is expected to tick higher in the coming months, and thus the BoE won’t want to deviate from its strategy just yet.
“The election campaign has also seen Labour and the Conservatives putting forward proposals to increase economic growth in an incredibly restricted fiscal environment. Given tight public finances, it is unlikely substantial growth will be conjured up without significant additional borrowing, something neither party, nor the bond market, is particularly keen on. With the result looking increasingly like a foregone conclusion, Labour will hope its plans to invest in ‘green’ jobs and infrastructure will help the economy break out of its' current state of malaise, but without the necessary fiscal headroom this is likely to be an uphill struggle."
