(video Transcript)
UK economy not faring well
The UK economy failed to grow in the third quarter, but at least it side-stepped the start of a recession. However, the numbers are grim. Taking a look here at the details, pretty much 0% change in gross domestic product (GDP) in Q3 compared with a forecast for a 0.1% fall. This is according to Roche’s poll.
In September, the economy grew by 0.2% from August, when growth was revised down. Now, what has to be said is the weakness is seen pretty much across the board. We’re seeing weakness in manufacturing.
Also, our recent numbers on industrial production show a lackluster sort of demand there as well. What is key, though, to take from all this is that many economies out there are still struggling post-COVID.
High interest rates stunt growth
However, Britain’s economy is still behind, a long way off, actually, behind the US, where the economy has grown by more than 7% from its pre-pandemic level. And also, if you compare it with Germany in terms of growth, take a look at sterling here, because this has been both a sterling and a dollar story as well.
The Fed has, as you know, been aggressively tightening interest rates. The UK has paused at the moment. But with growth so weak and also inflation not yet completely abated, what’s likely is that if interest rates remain high in the UK, then growth will be suppressed.
