Sunday 29, October 2017 by William Mullally

UK GDP grows by 0.4 per cent

Mihir Kapadia – CEO and Founder of Sun Global Investments

The UK GDP grew by 0.4 per cent in the third quarter of the year, relatively better than expected, and up from 0.3 per cent growth from the second quarter. The UK’s manufacturing sector also returned to positive growth, with output rising by 1 per cent during the quarter. While the 0.4 per cent is still below the UK’s long term growth rate, it certainly contributes to a positive momentum, and means that the economy has not yet rolled into a recession that was largely predicted over Britain’s decision to leave the EU. The UK’s annualised growth is now sitting at 1.5 per cent, a subpar score against a formidable looking EU economy.     

Sterling has risen on the back of today’s growth report, up 0.25 per cent against the US dollar to $1.317. The City is getting into a more hawkish tone, expecting that the pick-up in growth raises the chances of a UK interest rate rise next month.

The third quarter has been particularly difficult for the UK economy, with inflation ringing 3 per cent while wage growth has been subdued. Consumers are facing an increased squeeze in living standards while the city has been brought to its knees by the increased uncertainty over Brexit proceedings.