Economy to escape recession scare in pre-election boost for Boris Johnson

Economy to escape recession scare in pre-election boost for Boris Johnson

The progressive British economy returns from its first contraction in seven years on Monday in a boost to the Boris Johnson election.

Growth will swing back to positive territory when official estimates for the last quarter are published after a year dominated by the twists and turns of the Brexit process.

Experts predict that the output will be 0.4 p.c. between July and September. Will increase, while the UK picks up the hangover from a weak second quarter, when the economy was down 0.2 p.c. Dropped.

Growth declined enormously in 2019, as stocks at the beginning of the year prior to the original Brexit deadline of March 29 boosted growth by 0.6p before declining as companies declined.

The UK’s dominant services sector will be the main driver of growth, but the figures come days after warnings from the Bank of England about the impact of a deteriorating global economy and the effect of uncertainty about Brexit on corporate and household spending. The concerns were prompted by two interest rate determinants to vote for an immediate interest rate cut last week.

The last quarter will also weaken again thanks to the disruptive effect of the Brexit deadline of 31 October. Investec economist Victoria Clarke expects ‘a result not far above zero’ for the last months of the year, while Martin Beck from Oxford Economics said a slower progress of 0.2 pc. Growth of 1.3 pc in the last quarter. For the entire year it would mean – the weakest since 2009.

The prospects for growth are expected to improve if the Brexit deadlock is finally broken after an election.

Hedge funds have lowered their pounds bets in recent weeks following the prime minister’s deal.

Economy to escape recession scare in pre-election boost for Boris Johnson

In just two weeks, speculators have halved their net short position and bet that the pound would fall if they reduced their exposure to a sudden rise in the currency. The net number of contracts that bet on a fall has been reduced from more than 70,000 to 32,000.

The yo-yo growth pattern is partially influenced by Brexit deadlines and extensions, and means that the UK avoids the recession definition of two consecutive quarters of contraction.

Increasing exports, government spending and household consumption are keeping GDP at the same level, while falling corporate investment and production are damaging growth.

The ONS publishes vacancies on Tuesday. Analysts expect unemployment to remain stable at 3.9% with a wage increase of 3.8% on an annual basis. That wage continues because price inflation is expected to fall to 1.6 percent in Wednesday’s CPI release.

On Thursday, the retail sector should show a modest recovery in October, the year and the month.

Thursday will also show whether Germany is in a recession. Economists expect a second consecutive fall in GDP of 0.1%.

Written by Tommy Kilmer

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