CHART OF THE WEEK
The trade-off between timeliness and accuracy is an ongoing battle in the world of statistics. The UK’s Office for National Statistics (ONS), which traditionally publishes national GDP growth estimates faster than many nations, has now decided to improve accuracy by delaying the release of its quarterly GDP figures. However, the move has been offset by introducing the publication of monthly GDP estimates since July.
The monthly data indicate that UK GDP growth has recovered in recent months following a poor start to the year. The data used for these estimates suggest growth could reach 2.6% on an annualised basis, a level not seen since 2016.
Record-low unemployment, accelerating wages and an inflation rate that is moving back to normal levels have combined to underpin household spending. Core inflation, having spiked at 2.7%, now stands at 1.9%. This increased spending is a significant driver behind the growth recovery. The more positive domestic backdrop prompted the Bank of England to increase rates to 0.75% in July, following a first rate rise in November 2017.
Despite domestic demand picking up, Brexit uncertainty considerably muddies the economic outlook for the UK. The final outcome of Brexit negotiations is impossible to forecast, and the cloud of uncertainty could be a drag on corporate investment. If the UK leaves the EU with no deal, the change in trade rules could disrupt international exchanges and therefore the economy. In this case, better spending figures would struggle to compensate for the negative impact on growth.
GDP1 : main economic index measuring the economic production inside a given country.
The opinion expressed above is dated as of 18 October 2018, and liable to change.
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