The contraction in UK GDP in the third quarter will support bets on a rate cut by the Bank of England.
On Friday, data released by the Office for National Statistics showed thatThe UK's gross domestic product (GDP) shrank by 0.0 in the third quarter from the previous quarter1%, less than expected and the preliminary 0%, after the UK's Q2 GDP grew by 02% downgraded to 0%.
A recession is defined as two consecutive quarters of contraction, and the UK has been concerned about sluggish growth, but the country has narrowly avoided a recession so far. It will not be clear until February, when the data for the October-December quarter is released, whether the UK can avoid a recessionThe UK's Office for Budget Responsibility (OBR) expects economic growth to be 01%。
The Office for National Statistics (ONS) reported that rising interest rates weighed on consumer spending, which slowed during the period, estimated between July and SeptemberReal household disposable income fell sharply, growing by only 04%, compared to a 2. growth in the previous three months3%。Ashley Webb, a British economist at Capital Economics, said:
The revised data could mean that a mild mild recession began in the third quarter, with or without a "small recession,"Economists generally expect economic growth to remain subdued throughout 2024.At the same time, UK inflation cooled more than expected, with data showing that UK inflation slowed sharply to a two-year low in November compared to expectations, and **3 year-on-year9%, down from 46%。The data could increase pressure on the Bank of England to pivot to interest rate cuts sooner rather than later, as economic momentum wanesExpectations for a rate cut by the Bank of England as early as May are growing, with traders expecting the Bank of England to cut rates by 143 basis points next year.
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