“The big message that investors will take from today’s GDP figures isn’t that there was a fall in January, but that the fall was far less steep than most economists had predicted,” comments Danni Hewson, financial analyst at AJ Bell. “Despite a renewed lockdown with school closures, output was pretty resilient, demonstrating how businesses have adapted.
“Despite the vaccine roll-out there are still lingering concerns that another lockdown may be required later this year. The economy’s performance in January will bolster optimism that even a worst-case scenario won’t be as bad for business as previously thought.
“But the numbers that will be of most concern today have to do with trade. Exports to the EU fell a startling 40.7% in January according to the ONS. Goods coming the other way were down almost 30%.
“Some of this decline can be put down to lockdown, stockpiling and teething troubles. But it’s clear that the Brexit transition has been far from smooth and markets will be paying close attention to whether current frictions mean long-term changes.”