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Falling energy prices is a sign for a better GDP.

 The UK eco­nomic out­look for this year has improved, with ana­lysts pre­dict­ing a smal­ler con­trac­tion

GAS price
in out­put than pre­vi­ously thought because of fall­ing energy prices and bet­ter than expec­ted busi­ness and con­sumer sen­ti­ment. The latest S&P Global/ Cips flash com­pos­ite pur­chas­ing man­agers’ index showed Brit­ish busi­ness activ­ity reboun­ded in Feb­ru­ary after six months of declin­ing out­put. Con­sumer con­fid­ence in Feb­ru­ary reached its highest level in almost a year, accord­ing to research group GfK. While the cost of the liv­ing crisis is far from over, and the Bank of Eng­land could raise interest rates fur­ther to curb infla­tion, there has been a sharp fall in whole­sale energy prices, which soared after Rus­sia’s inva­sion of Ukraine in Feb­ru­ary last year.

Liz Mar­tins, eco­nom­ist at HSBC, said that given the bet­ter eco­nomic news and fall­ing energy prices, «it is now plaus­ible that there is no reces­sion at all». Allan Monks, eco­nom­ist at JPMor­gan, estim­ated that the eco­nomy would expand by 0.4 per cent this year, partly owing to lower energy prices. Ellie Hende­r­son, eco­nom­ist at Investec, said, «the fall in energy prices is the sun­shine on a cloudy day» for the eco­nomy because it eased pres­sure on busi­nesses and house­holds. In addition, lower whole­sale gas prices mean the gov­ern­ment’s cap on house­hold energy bills has become less expens­ive for min­is­ters.

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  1. Albert27 February 2023 at 09:47

    Even if the economy expanded 0.4% this year that's still not very good considering how much it went down lately. It would show some level of progress but it's not something you would brag about, I think. Still a long way from where we should be.

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    Replies
    1. Adam27 February 2023 at 10:25

      A 0.4% increase this year? I'll take it. I know it's not much but it's surely better than a recession. And I'm still not certain we won't go into one.

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