KPMG UK has commented on the recently released UK GDP data.
Yael Selfin, Chief Economist at KPMG UK, noted:
“GDP growth stalls amid growing uncertainty. GDP growth remained disappointing, showing no progress for five consecutive months, due to weaker activity across a broad swathe of the economy. Construction, manufacturing and consumer-facing services saw the steepest declines, which could curtail further growth before the end of the year.”
They added that October activity was held back by “uncertainty ahead of the Budget, with consumer and business confidence near recent lows.”
They also mentioned that the fourth quarter could see “a weaker pace of growth, as businesses come to terms with the higher tax burden announced at the Budget as well as rising geopolitical uncertainties.”
Selfin further noted that, nevertheless, KPMG UK expect higher public spending to “lift GDP growth next year, with lower interest rates providing some boost to private sector demand.”
In another separate update, KPMG comments on the recent European Central Bank decision.
European Central Bank ends year on the “front foot.”
Yael Selfin, Chief Economist at KPMG said
“European Central Bank ends year on the front foot as growth concerns mount. The ECB cut interest rates for the fourth and final time this year as it shifts its focus from combatting inflation to supporting the Eurozone economy. Inflation risks have receded but activity in the Eurozone economy remains sluggish. Downside risks to the growth outlook have also intensified in recent months, including potential global trade frictions which could hamper some of the export dependent countries.”
They added:
“Today’s decision to cut interest rates, combined with the more dovish tone in the statement, underscores the change in strategy by the ECB. Crucially, the ECB reiterated its data dependent approach, however, the statement dropped reference to keeping interest rates in restrictive territory. The Governing Council will have been wary of weak economic activity and high borrowing costs contributing to inflation undershooting its target in the medium term.”
They concluded:
“Monetary policy alone will not be sufficient to remedy the Eurozone’s underlying economic challenges. Nonetheless, the ECB will want to avoid being behind the curve given the uncertain economic outlook. We expect the ECB to accelerate the pace of cuts next year and see interest rates falling to 1.75% by the end of 2025.”
