AJ Bell press comment – 13 January 2023
- GDP up 0.1% in November helped by Britons’ World Cup revelries
- Strike action impacts transport and postal sectors
- But GDP in the 3 months to November down 0.3%
Danni Hewson, AJ Bell financial analyst, comments on the latest UK GDP figures:
“It seemed the writing was scrawled on the wall in indelible ink that the UK was marching inexorably towards an official recession, measured by two consecutive quarters of negative growth. October’s rise in GDP had been expected, boosted by comparisons with the former month when businesses and schools were closed as a mark of respect to the late Queen Elizabeth.
“But November didn’t play ball, in fact it was busy with another game altogether as football fans propped up bars across the country as the World Cup wove its magic. There was also growth in other parts of the service sector, with computer programming and telecommunications being singled out in the latest data.
“It’s hard to be a ‘Negative Nelly’ in the face of today’s relieved headlines, but let’s not get carried away. The UK economy might have a bit more fight in it than many analysts had anticipated but celebrating 0.1% growth feels a bit like clutching at straws.
“Over the three months to November GDP fell and the UK economy is still floundering around in the post-pandemic mire, down 0.3% on February 2019 levels.
“Manufacturing seems stuck in its downward groove, construction flatlined in November and strike action was beginning to exert its grip on productivity on the rail network and postal and courier services.
“December will tell the tale and it’s hard to see how this story will have a happy ending. Think back just a few weeks when the treats behind the traditional advent calendars were replaced by strike data, a clever gimmick by news organisations but also a reality with far reaching consequences.
“Recent trading updates from a slew of companies suggest the UK consumer did push the boat out for the festive season, but that spending was tempered by disruption to parcel deliveries, interruption of normal health care activities and the ability to get where people wanted to go.
“There is now a small seed of doubt that next month’s figures will confirm that the economy has met the criteria for recession. We feel it in every bill we pay, every purchase we make and every journey we take. Things are tough and we’ve been warned they are going to get tougher even if we don’t put a label on it.”
