12 October 2022
If you are covering the latest UK GDP figure for August, please find below a comment from Marcus Brookes, chief investment officer at Quilter Investors:
"Considering the daily headlines centred on Britain’s finances it comes as no surprise that after a surprise bounce back in growth in the UK in July we’re faced with a disappointing set of results in August which show that GDP is estimated to have fallen by 0.3%. This might be even lower when we get to September’s results that will include an unexpected Bank Holiday and 10 days of national mourning.
"While this figure is not what the country wants to see, it won’t make much of a difference to the path we are already on. The Bank of England (BoE) will continue to increase its base rate at it battles to tame runaway inflation. The BoE continues to face the incredibly difficult task of guiding the country through this uncertain period where it finds itself in a rock and a hard place by raising rates to meet inflation but embarking on a gilt buying operation to help steady the markets following the turmoil precipitated by the mini budget.
"Whether the Conservatives stance against the so called “anti-growth coalition” actually ends up producing growth is yet to be seen. What is likely though is that due to a combination of rising mortgage bills, higher energy bills and ever-increasing inflation the next few months are likely to prove difficult for everyone including government, businesses and households.
"For investors, however, a lot of this angst is already priced in by the markets, albeit with some additional volatility. The biggest risk, therefore, is that investors flee from the market at just the wrong time and miss out on the opportunities that volatile times bring. Looking for quality businesses is going to be increasingly important as these might be the ones that can ride out this short to medium term volatility and profit from any eventual market rebound."
