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UK GDP: Anaemic growth vs. mild recession

13th Mar 24 11:16 am

UK GDP rose 0.2% in January, following a 0.1% fall in December and real GDP fell 0.1% over the three months to the end of January, compared to the three months to October 2023.

Services output grew 0.2% quarter-on-quarter, with 0.6% growth in consumer facing services, whilst construction output grew 1.1%% quarter-on-quarter.

Production fell 0.2% quarter-on-quarter and GDP had been expected to rise 0.2% month-on-month (Trading Economics).

Nicholas Hyett, Investment Manager, Wealth Club said, “A stronger month for the dominant consumer sector, particularly consumer facing services, together with pick up in construction activity means the UK economy is back in growth in January – albeit modest.

“That was despite some disruption to global supply trains from conflict in the Middle East and Red Sea, and the impact of strikes in healthcare, railways and the Screen Actors Guild – all of which dented overall output.

“The UK’s small manufacturing sector continues to struggle – thanks in large part to a continued slowdown in North Sea oil investment.

“The Chancellor’s recent decision to extend a windfall tax on UK oil & gas producers is unlikely to do a sector which has been in decline since at least the late 1990s many favours – further discouraging investment in what is a mature oil field anyway.

“Overall performance is in line with market expectations, so unlikely to cause a major move in markets.

“But, if the return to growth can be sustained the country should be on course to exit recession in pretty short order – a relief for the government even if the man or woman on the street is unlikely to notice the difference between anaemic growth and mild recession.”

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