UK January GDP: post Omicron bounce and outlook worsens

Commenting on this morning’s UK GDP data, Melanie Baker, Senior Economist at Royal London Asset Management said:

“Business surveys suggest that today’s GDP bounce should be followed by another relatively robust month for activity growth in February. However, it would not be surprising if this growth started to struggle a bit more in coming months.

“The UK economy continues to face a number of challenges to activity growth in 2022, some of which have worsened in light of the Ukraine crisis.

“Consumers were already facing a hit to their finances in real terms - real pay growth was already weak as wage growth has not kept up with inflation. In light of recent movements in commodity prices, the inflation peak now looks likely to be higher, and high inflation likely to last longer than previously expected. The outlook for business investment has also deteriorated in light of heightened uncertainty around the economy.

“Meanwhile, another Bank of England interest rate rise is still expected next week.”

–ENDS–

The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.