World Cup fans boost UK economy, ease recession risk

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World Cup fans boost UK economy, ease recession risk


The UK economy unexpectedly picked up some growth in November after being boosted by World Cup drinkers and video game sales, reducing the odds of it already slipping into recession.

Gross domestic product rose 0.1% from October, higher than forecasts by a Reuters poll of economists, which showed a 0.2% decline in figures from the Office for National Statistics (ONS) on Friday.

For the UK to record two consecutive quarters of falling GDP would mean that output would need to plunge by about 0.5% in December.

The United Kingdom, the world’s sixth largest economy, contracted 0.3% in the three months to the end of September as production was hit by the closure of businesses commemorating Queen Elizabeth’s funeral.

“December was a month of strikes and weak activity data, but with favorable winds the UK may be able to avoid a recession,” said HSBC economist Liz Martins.

The big picture still remains suppressed.

Economic output in November was 0.3% lower than before the pandemic, according to the ONS.

Output is above pre-pandemic levels in all other G7 countries.

Consumer price inflation hit a 41-year high of 11.1% in October, with living standards under their greatest pressure in decades.

The government’s budget watchdog forecast in November that production would fall by 1.4% in 2023.

“Going forward, we expect GDP to contract through the third quarter of this year as personal consumption is likely to weaken as real household incomes come under greater pressure,” said Thomas Pugh, an economist at accounting firm RSM UK. there is,” he said.

High inflation prompted a series of strikes by workers in the public sector and railroads demanding higher wage increases.

“The most important thing we can do to help is stick to our plan to halve inflation this year and get the economy back on track,” said Finance Minister Jeremy Hunt.

The Bank of England (BoE) forecast in November that inflation would ease to around 5% by the end of the year.

Investors expect the BoE to raise interest rates from 3.5% to 4% on February 2nd.

World Cup boosts pub spending

Britain’s large services sector was the best-performing part of the economy in November, with output up 0.2% in the month despite widespread rail and postal strikes.

The ONS said much of the increase reflected people going to pubs to watch the men’s soccer World Cup, with food and beverage service output up 2.2% over the month, an early rise before Christmas. I spent on video games in stages.

Manufacturing output fell by 0.5% due to a drop in pharmaceutical production, which was often volatile.

A seasonal decline in COVID-19 vaccination coverage reduced GDP by 0.2 percentage points in November.

The UK goods trade deficit widened to £15.6bn ($27.3bn) in November, just above the £14.9bn ($26bn) forecast in a Reuters poll.

Trade with the EU has been hit hard by Brexit, although the scale is difficult to judge due to changes in data collection, discrepancies in UK and EU data, and the impact of the pandemic.

HSBC economist Liz Martins said exports have increased by almost 20% since June, with the latest ONS data showing exports to the EU are 4.5% below pre-pandemic levels, while exports to non-EU countries are down 4.5%. exports are 0.4% above that level. pre-pandemic.

Reuters

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