29 September 2023
If you are covering the UK GDP quarterly national accounts data from the ONS, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“Today’s GDP quarterly national accounts data gives some hope that a recession can still be avoided by the UK. There are bright spots in today’s report from the Office for National Statistics, as recession appears increasingly unlikely in 2023. This will bring some respite to the pound, which has taken a bit of a battering in recent days as interest rates are predicted to have peaked.
“Given the economic hit that was experienced from the various bank holidays in the second quarter, including the coronation of King Charles, the government will be pleased to see economic growth unrevised at 0.2%. Indeed, the first quarter also saw an upwards revision to 0.3%, highlighting that while economic growth is challenging, it isn’t quite non-existent for the UK.
“We are also seeing shoots that the cost of living crisis may be easing for households. While expenses are still elevated compared to pre-pandemic periods, disposable incomes are beginning to move ahead, bringing relief to many households who will have struggled over the winter months and where excess savings from the pandemic have dried up.
“However, given the speed of interest rate rises and the cumulative effect of the cost of living crisis, it may just be a case of the pain being delayed, with 2024 looking more challenging. The BoE has an incredibly difficult job to do, and with next year likely to see a general election at the same time, they won’t want to overcorrect and tip the balance of power one way or another. With rates expected to say higher for longer and no sign of when to expect the first cut to rates, consumers will continue to be buffeted by the economic headwinds. The economy may be holding up just now, but it is asking a lot for to continue to do so for quite so long.”
