Home Financial Planning GDP nudges up as fears of lengthy recession ease  

GDP nudges up as fears of lengthy recession ease  

GDP nudges up as fears of lengthy recession ease  


UK GDP is estimated to have risen by 0.1% in February and the determine for January has been revised up from 0.2% to 0.3% development, elevating expectations that the UK will keep away from a protracted recession.

There was sturdy development in manufacturing, notably fuel and automotive manufacture.

Development stays anaemic, nevertheless, in response to most consultants.

Providers output rose by 0.1% month-on-month with development output down 1.9% month-on-month. Manufacturing rose 1.1% month-on-month.

ONS, which produces the information, mentioned that the development business was hit by moist climate.

The UK entered a shallow recession on the finish of 2023 however the economic system now seems to be rising, albeit at a sluggish charge.

Danni Hewson, head of monetary evaluation at AJ Bell, mentioned the information was usually constructive.

She mentioned: “Any development is sweet information and positively the UK appears to be trudging slowly out of final yr’s short-lived recession. However at 0.1% in February and even with the upwardly revised 0.3% in January, UK development appears to be like fairly pitiful while you evaluate it to the financial image on the opposite aspect of the pond.

“The influence of rain on GDP explains why we Brits are so pre-occupied with the climate. All these downpours dampened spirits and saved consumers tucked up of their properties. Development work slowed as soon as once more and the rain undoubtedly performed a component right here, nevertheless it wasn’t the entire story.”

Nicholas Hyett, funding analyst at HNW-focused funding dealer Wealth Membership mentioned: “Constructive UK GDP development in February, coming along with an improve to the January estimate, will do nothing to reassure markets that rate of interest cuts are locked in for the primary half of this yr. 

“Having mentioned that, areas of the economic system which can be depending on discretionary spending do look sort of soggy. Lodging and foods and drinks companies each contracted in February and the development sector is within the doldrums (with eight out of 9 sectors seeing a lower month-on-month). There are solutions moist climate might have performed a component right here, however an rate of interest lower may very well be fairly useful to these areas of the economic system nonetheless.” 

Ed Monk, affiliate director at Constancy, mentioned: “It has to depend as excellent news that the economic system is returning to development – the GDP estimate immediately means the UK grew 0.4% throughout January and February. Final yr’s recession seems to have been each shallow and short-lived however the reality stays that UK development stays weak. We could also be shaking off technical recession however that received’t change the sensation that there’s little or no momentum within the economic system.

“If immediately’s studying is constructive for development total it could find yourself being dangerous information for each debtors and monetary markets, within the short-term not less than. Each are ready for the Financial institution of England to chop charges however wage rises and now higher efficiency in elements of the economic system are including to inflationary pressures. Expectations of charge cuts this yr have softened and markets now count on solely two cuts earlier than 2025. It appears you possibly can have a recovering economic system, or you possibly can have the reduction of decrease charges – however you possibly can’t have each on the similar time.”



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