UK GDP Bump Helps Slightly Steer Risk of Recession

1/13/2023

Bloomberg

A small recovery in the UK economy via an increase of 0.1% in gross domestic product (GDP) is helping its economy slightly decrease the risk of falling into a recession. This comes despite a recession expected by the central bank from late 2022 until 2024.

While some parts of the world's economy, like the UK and the US, are at risk of recession, the UK economy was able to avoid a recession due to a slight bump in GDP nearing the final months of 2022. According to the Office for National Statistics, the 0.1% growth happened in November.

The chief economist for the Institute of Directors, Kitty Ussher, gave a statement on how the move encourages businesses but also that there is still another risk that could happen.

Ussher: “Today’s better-than-expected data will be encouraging for businesses, but may also cause a cautious Bank of England to continue raising rates unnecessarily... The risk now is that rates will rise too far.”

Ussher also specifically noted that due to the small rise in GDP in November, the UK economy is less likely to fall into a recession by the end of the year. However, despite its boost, the GDP remains 0.3% below pre-Covid levels.

Jeremy Hunt, the Chancellor of the Exchequer, gave another statement regarding their plans when it comes to inflation. These included tax, which has then affected everything else.

Hunt: “We have a clear plan to halve inflation this year - an insidious hidden tax which has led to hikes in interest rates and mortgage costs, holding back growth here and around the world,”

This comes at a time when almost 2 million UK households have missed payments or defaulted on at least one mortgage. This came from a survey involving 2,000 participants.

While the UK economy might have lowered the risk of a recession, global hedge funds were set to hit a 14-year low.

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