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Unexpected growth for the UK economy.

UK economy

 The UK economy grew in November, helped by more robust services activity during the World Cup, in a shift that defied expectations and is likely to increase pressure on the Bank of England to raise interest rates. The Office for National Statistics said that the gross domestic product grew 0.1 per cent between October and November last year. A Reuters poll of economists had forecast a 0.2 per cent contraction. However, November's output expansion was "undeniably encouraging", said Ruth Gregory, an economist at Capital Economics, who added that the government's cost of living payments meant households had more cash in the month.

The index has gained 5.3 per cent so far this year as a part of a broad rise in European shares that has been driven by falls in energy prices and hopes that inflation has peaked. Many FTSE 100 companies have substantial international operations, which means the index is not a reliable proxy for investor views on the UK economy. However, November's GDP growth could signify that the economy avoided a technical recession, defined as two consecutive quarterly contractions, at the end of 2022. Gregory said this "will only add to the pressure for the Bank of England to raise interest rates further from 3.5 per cent, perhaps to 4.5 per cent in the coming months".

Markets have priced in a 57 per cent probability that the BoE will raise its rate by 50 basis points from the current 3.5 per cent at its next meeting on February 2. Rates have risen sharply from 0.1 per cent in November 2021 as the central bank battles inflation.

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  1. Simon14 January 2023 at 17:52

    It's nice to get some good news once in a while. Let's hope it lasts and we will see more growth in the upcoming months.

    ReplyDelete
  2. Nathaniel14 January 2023 at 19:47

    Still waiting to see this "growth" in our pockets. Not seeing it at the moment but am hopeful I will soon.

    ReplyDelete

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