27 Feb 2015
BoE remains upbeat on UK’s growth prospects – ING
FXStreet (Barcelona) - James Knightley, Senior Economist at ING, notes that UK’s 4Q GDP was left unrevised and the breakdown shows a mildly disappointing mix, but the Bank of England remains upbeat on the prospects for 2015 with investments and consumer spending set to improve.
Key Quotes
“4Q14 GDP was confirmed as recording growth of 0.5% QoQ, down from the 0.7% rate experienced in 3Q14.”
“Yesterday’s report provided the expenditure breakdown and showed a slightly disappointing mix with consumer spending continuing to be responsible for the majority of growth, albeit at a slower pace than seen in recent quarters.”
“Investment spending actually fell, government spending was flat with the one bright spot being a rebound in exports following a poor couple of quarters.”
“In terms of the investment story, the plunge in oil prices has certainly weighed on capex in the oil and gas industry while concerns regarding the Eurozone will also likely have held back investment spending to some extent. However, recent better newsflow out of the Eurozone suggests we should be looking for some improvement in coming quarters.”
“Credit is now starting to flow and sentiment is rising in the UK’s main export market. At the same time domestic business surveys are rebounding with next week’s purchasing managers’ indices likely to add to the relative optimism.”
“With household incomes now rising in real terms (thanks to the strength in employment growth, some signs of pay rises and the plunge in inflation), the prospects for consumer spending also look good.”
“Consequently, the Bank of England are anticipating a reacceleration in GDP growth and we agree, predicting GDP growth of 0.7% QoQ in 1Q15.”
Key Quotes
“4Q14 GDP was confirmed as recording growth of 0.5% QoQ, down from the 0.7% rate experienced in 3Q14.”
“Yesterday’s report provided the expenditure breakdown and showed a slightly disappointing mix with consumer spending continuing to be responsible for the majority of growth, albeit at a slower pace than seen in recent quarters.”
“Investment spending actually fell, government spending was flat with the one bright spot being a rebound in exports following a poor couple of quarters.”
“In terms of the investment story, the plunge in oil prices has certainly weighed on capex in the oil and gas industry while concerns regarding the Eurozone will also likely have held back investment spending to some extent. However, recent better newsflow out of the Eurozone suggests we should be looking for some improvement in coming quarters.”
“Credit is now starting to flow and sentiment is rising in the UK’s main export market. At the same time domestic business surveys are rebounding with next week’s purchasing managers’ indices likely to add to the relative optimism.”
“With household incomes now rising in real terms (thanks to the strength in employment growth, some signs of pay rises and the plunge in inflation), the prospects for consumer spending also look good.”
“Consequently, the Bank of England are anticipating a reacceleration in GDP growth and we agree, predicting GDP growth of 0.7% QoQ in 1Q15.”