July GDP figures - PwC comments

Sep 09, 2019

PwC chief economist John Hawksworth comments on the latest GDP figures:

"There was an unexpectedly strong rise of 0.3% in GDP between June and July, with all major sectors of the economy returning to positive growth. Barring a serious relapse in August and September, this suggests that the UK should avoid falling into a technical recession in the third quarter.

"Looking through the volatility in the monthly data, however, the underlying picture is still one of an economy that is flat-lining, with zero GDP growth in the three months to July as compared to the previous three months. The services sector is growing modestly, helped by continued consumer spending on the back of a strong labour market, but manufacturing and construction remain relatively weak. This big picture is consistent with last week's purchasing managers' surveys for August.

"Looking ahead, much depends on the outcome on Brexit. If a reasonably smooth exit from the EU can be achieved, then we remain optimistic that UK growth could bounce back to over 1% next year as business investment recovers and public spending picks up in line with the plans announced by the Chancellor last week. 

"But if there is a disorderly Brexit, the UK economy could be tipped into recession. And if there is a prolonged period of political limbo with no clear resolution of the Brexit issue, then businesses could continue to defer major investment decisions, causing the UK economy to continue to stall."

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