The following The following is a commentary from Samuel Fuller, Director of Financial Markets Online, on the UK GDP figures.
UK GDP Has Flipped Into Reverse
“The UK economy slammed on the brakes in the second quarter, not helped by war, inflation and extra holidays. GDP may have beaten expectations by a whisker but, having flipped into reverse, that’s not going to count for very much. There may be good reasons for this readout but the stop-start recovery is still a grim reality with recession bearing down.
Q2 2022 hedge fund letters, conferences and more
“Andrew Bailey has set such poor expectations for the UK economy over the next 18 months, recession is a foregone conclusion and the risk is it ends up being deeper than it needs to be. Businesses everywhere will now be planning their hiring and investment strategy around a pretty torrid 2023. That’s been putting the pound under pressure even as expectations have risen that the Fed will tighten more slowly and Bank of England interest rates will continue to rise.
“With Sterling already pretty weak after a sustained slump against the dollar, the pound didn’t react too badly. With the US already in technical recession the UK’s in good company and it’s still very unlikely the UK will post a second consecutive contraction in Q3.
“However, with inflation predictions of over 13% by the start of the fourth quarter, it’s going to continue to be bumpy from here. The inflation fight is top billing and the economy is just going to be dragged along with it.”
