The UK government is hoping to spur growth by starting construction up to 12 new towns by the next election. Each new town will have the potential for at least 10,000 homes with accompanying infrastructure, as the government promised to sweep away red tape and overcome environmental objections to get them built. More here:. Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
We’re about to learn how the UK economy fared in the final three months of 2024. The first estimate of UK GDP for the October-December quarter is due to be released at 7am, but it may not make cheerful reading for the government. City economists are expecting to learn that the economy shrank by 0.1% in Q4 2024, which would Britain on the brink of a technical recession – defined as two quarterly contractions in a row.
The economy stagnated in July-September, so expectations are that the economy hasn’t grown in the two quarters since Labour won the general election in July. Today’s data will also show how the economy performed in December. Earlier data has shown that GDP fell by 0.1% in October, followed by a 0.1% rise in November (these figures could be revised, though.). And there are tougher times ahead, as Donald Trump threatens to ignite a trade war.
Michael Field, chief equity strategist at Morningstar, says:. Some sectors of the UK economy are clearly struggling, such as manufacturing and particularly areas like chemicals, as they are grappling with high energy prices relative to the US, making them less competitive. The danger is that US tariffs could also worsen the situation for exporters. Interest rates have fallen by 75 basis points from the peak, with the market expecting another 65 basis points of cuts this year. The cuts may be coming at a slower pace than markets would like, but over time these cumulative cuts should help create a more supportive economic environment for businesses.”.
