- UK economy grew 0.2% in January
- Strong rebound from retail sector a major contributor to growth
- Housebuilding also rebounded in January
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK GDP figures:
“There’s been lots of talk about ‘green shoots’ and an economy that’s turning a corner, and January’s GDP figures delivered growth primarily thanks to a rebound from the retail sector as cash-strapped Brits rushed to take advantage of post-Christmas sales. However, we won’t know officially until May whether that means the recession the country dipped into at the end of last year is already in the rear-view mirror.
“But being serious, 0.2% is hardly a number to get excited about, it’s just a continuation of the trend that we’ve seen over the past couple of years. An economy bumping along the bottom, flatlining and stagnating.
“Psychologically shedding the label of recession is important because it helps foster confidence. But the biggest shot of adrenaline is likely to come once the Bank of England finally delivers the much-anticipated interest rate cut that markets are expecting in the summer.
“It’s that optimism which pushed the FTSE 100 up to a nine-month high yesterday and is being mirrored over on the other side of the Atlantic despite concerns about sticky inflation.
“Households and businesses are hurting after 14 hikes pushed rates up to a 15-year high, with the latest update on mortgage arrears showing a spike of 50%.
“Confidence is crucial. It gets builders building, makers making and sellers selling. And those green shoots are visible, they just need a bit of fair weather to bed in.”
