UK GDP Ekes Out Positive Number for February

The UK economy barely posted a positive figure in February, according to the Office for National Statistics.  Monthly GDP is said to have grown by 0.1% in February 2024, following growth of 0.3% in January 2024. The consecutive growth indicates that the UK has exited a technical recession – barely.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, noted the positive number but described GDP as not very inspiring.

“Falls in construction activity also indicate a broader malaise the UK is yet to shake off,” said Lund Yates. “We’ve known for some time that major housebuilders have been building fewer homes, as people wait for finances to improve before making large financial decisions. Heavy rainfall has also dampened construction activity, as repair and maintenance work were delayed. All-in-all, the rate of economic growth has slowed, and there’s still a lot of extra coals needed to stoke the UK’s engines.”

She added that higher CPI numbers from the US, along with elevated geopolitical tensions, mean more uncertainty.

Douglas Grant, Group CEO of Manx Financial Group, said the GDP number means challenges still exist.

“The data is reflective of separate research conducted by Manx Financial Group that reveals a significant shift in the financial landscape for SMEs. In contrast to the previous survey, where only 25% faced challenges, the current findings indicate that two out of five SMEs are now grappling with operational slowdowns or halts due to a lack of external financing. The survey also underscores that 15% of SMEs seeking external finance or capital are unable to secure the necessary funds. These financial constraints, coupled with a potentially unprecedented and volatile environment marked by ongoing conflicts, multiple elections, a tightening labour market, and persistent cost-of-living challenges, pose obstacles to the prospects of SMEs and national economic growth.”

Grant continues to call for greater support from the UK government with permanent government-backed loans for SMEs.

The National Institute of Economic and Social Research has declared the recession is dead predicting 0.4% growth in Q1 2024.

“On the back of exiting a shallow recession in 2023, this seems to be a turning point, but in a broader perspective, the UK economy has flatlined since 2022. Increasing productivity will be a constant challenge that requires structural changes and long-term spending commitments to public investment and infrastructure,” explained Hailey Low, Associate Economist at NIESR.

Of course, the geopolitical variables can change everything in a moment, as significant risks persist in the Middle East, Ukraine, and China.

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