By Jeremy Batstone-Carr, European Strategist, Raymond James Investment Services
This morning’s data confirms that the pace of UK economic expansion slowed in the run-up to Rachel Reeves’ inaugural Budget. As consumers and businesses waited to hear the Government’s fiscal policy plans, economic activity decelerated, although not to a halt.
Despite weakness in government spending and trade, buoyancy in consumer spending was sufficient to grow the economy by 0.2% in the third quarter of this year.
Throughout the quarter, varied conditions impacted economic output – industrial production and manufacturing output generally did not fare well, very much in line with industry elsewhere in the world. More encouragingly, the service sector benefitted from strength in professional services, particularly in advance of the Budget.
Looking ahead at quarters to come, today’s figures will form a foundation for the UK economy to build upon. Given the initiatives proposed by the Chancellor, we can expect focus to shift away from household spending towards government expenditure as a main economic driver.
Across the Atlantic, though the anticipated economic policies of Donald Trump’s administration may hamper the UK economy from mid-next year, domestic demand flowing from the Chancellor’s measures should more than offset this.
