Commenting on this morning’s UK GDP data, Melanie Baker, senior economist at Royal London Asset Management said:
“March saw a small contraction in GDP, driven by the retail/wholesale sector but likely reflecting both supply and demand factors. Although the April PMI business surveys still look consistent with relatively robust overall activity growth rates, recession risks have risen for the UK economy.
“The level of GDP stayed above pre-pandemic levels in March. However, consumer-facing services output remains well below pre-pandemic levels, still pointing to an economy operating away from normal patterns of activity.
“It would not be surprising if activity growth struggles in Q2/Q3. The main threat comes from very high inflation rates. Consumer confidence has plunged as real pay growth has deteriorated, driven by stubbornly high inflation including exceptional jumps in energy bills and with wage growth still not keeping up.
“Supply chain problems, labour availability, tighter monetary and fiscal policy, alongside tense UK-EU trade relations, remain challenges for the economy too.”
About Royal London Asset Management (RLAM):
Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.
RLAM manages £164 billion of assets and employs 129 investment professionals as at 31 December 2021. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.
For professional clients only, not suitable for retail investors.
Issued by Royal London Asset Management Limited, registered in England and Wales number 2244297; authorised and regulated by the Financial Conduct Authority. Registered Office: 55 Gracechurch Street, London, EC3V 0RL.
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