Commenting on this morning’s UK GDP data Melanie Baker, Senior Economist at Royal London Asset Management, said:
“The message from the data was not as gloomy as the fall in Q2 and June GDP growth might suggest. Focusing on June, GDP fell by less than expected, there was a loss of two working days compared to normal and reduced test and trace/vaccination activity played a key role too. In other words, it is difficult to view the fall in GDP as a sign of significant underlying deterioration in economic activity. At least not yet.
“I continue to have a recession pencilled into my forecasts, but for the turn of the year rather than sooner. Pay growth is not keeping up with inflation, consumer confidence is very weak, the Bank of England continues to hike rates. Energy prices remain a serious issue for the economy and a very large energy bill increase for households is widely expected in October, though there is still potential for more fiscal help for households too.”
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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.