the British economy It will close 2023 in a stronger position than previously thought, according to a survey of companies, amid signs that the government’s high interest rate campaign is… Bank of England It may not lead to a recession.
Data released on Thursday suggest businesses and households are weathering the storm of high inflation and borrowing costs at 15-year highs, good news for Prime Minister Rishi Sunak ahead of elections later this year.
The final S&P Global/CIPS Services Purchasing Managers’ Index (PMI) for the UK rose to 53.4 in December, showing that the sector grew stronger in December from the preliminary reading of 52.7 and 50.9 in November. Expectations of future activity rose to their highest level since May.
“The fresh rebound in December PMI suggests a recession should be narrowly avoided,” said Gabriella Dickens of Pantheon Macroeconomics. “However, the survey adds weight to our view that activity should increase gradually throughout 2024.”
Bank of England data released on Thursday also showed that British consumer net borrowing was the highest in almost seven years in November, with retail sales rising and lenders approving the most mortgages since June.
The pound advanced against the dollar and the euro after the release of PMI and Bank of England data. Investors are still waiting for the first interest rate cut in May.
A separate survey by the British Chambers of Commerce showed companies were somewhat more optimistic about sales growth this year after being largely stable in 2023, although they remained cautious about increasing investment.
Sunak claims he will make the economy grow stronger, but official data last month suggested the country may already be in a mild recession – marked by two consecutive quarters of economic contraction – after contracting between July and September.
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