GDP increase exceeds initial estimates
GDP is estimated to have increased by 1.3% in the last quarter of 2021, exceeding initial estimates of 1% according to the latest data from the ONS. This means that GDP is now 0.1% below its pre-pandemic levels. That’s a positive, right? Well, revisions to GDP figures for the past 2 years means that although the economy increased by a record 7.4% last year, this was in fact lower than the initial 7.5% estimate. The data also goes on to reveal that the household saving ratio (measuring hoe much household income is saved) fell by 0.7% in Q4 of 2021. This highlights a trend in terms of household finances where people faced with increasing costs are clearly dipping into savings funds.
Services sector maintains its upward trajectory
Services output rose to the highest level since June 2021 in March, according to latest figure from the S&P Global/CIPS purchasing managers index (PMI) for the services sector. This is the third consecutive month the index has risen in 2022, up 2.1 points from February to reach 62.6. This is against the backdrop of a slump in business confidence due to the conflict currently underway in Ukraine. Is this a sign those early predictions of an impending recession may have been wide of the mark?
Labour market growing at fastest pace since 2020
Employment growth in the UK made a sensational return to pre-pandemic levels in March, according to a recent report published by BDO. Its index, which measures ‘business sentiment among senior managers’ increased for a 5th consecutive month to hit a reading of 112.74, a 2 point increase from February. There were words of warning from BDO though who stressed ‘the cost of living crisis, rising inflation and wider geopolitical matters distract businesses from growth and place pressure on the employment index’.
Government borrowing halves due to rebounding economy
Government borrowing reduced by more than 50% from the £317.6bn in 2020-21 to £151.8bn in the last financial year. The figure is significantly above the £127.8bn forecast by the Office for Budget Responsibility (OBR) last month, driven up by 30-year high levels of inflation. Interest payments on debt more than doubled last year from £30.5bn to £69.9bn.
Borrowing in March came in at £18.1bn, the second-highest amount for the month since records began in 1993, but £8.8bn less than the amount borrowed in March 2021. The Office for National Statistics said the Government received much stronger than expected revenues from taxes, with receipts coming in at £619.9bn, an increase of £94.3bn.
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*Sources: Financial Times, Daily Express, Reuters, The Times, City AM, NACFB, BBC News, Evening Standard, The Guardian