Marcus Brookes, chief investment officer at Quilter Investors, comments on the current state of the UK economy:
“Following the slight bounce back seen in October, this morning’s data shows UK GDP unexpectedly grew by 0.1% in November. However, in the three months to November GDP fell by 0.3%, edging the UK closer to an official recession.
“Despite government support with energy bills and a reasonably mild winter thus far which should have supported people’s ability to spend, high inflation and rising everyday costs continue to have a significant impact on the economy. For the Bank of England, inflation remains the biggest scourge and as such we can expect it to continue to increase its base rate in the face of a recession – albeit there are growing calls to slow the pace of these hikes and for a pivot sooner rather than later.
“While Rishi Sunak vowed to see inflation halved in 2023, this will be a gradual process as opposed to a rapid decline. Given the combination of rising mortgage costs, higher energy bills and still high inflation, the coming months are likely to be challenging for everyone including government, businesses and households.
“Chancellor Jeremy Hunt announced that the UK had entered a recession during his Autumn Statement, and this morning’s data does little to alleviate these concerns. December’s reading is expected to confirm what already is known, but only time will tell just how long and how deep the recession will be.”
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