Third quarter sees UK economy grow by 1.3%

Economic growth was driven down in the third quarter of 2021 by weak consumer spending and supply chain use, according to latest figures from the ONS. Between July and September, growth was registered at just 1.3%, down from a 5.5% rise recorded between April and June. To put that into some perspective, this means the economy is now 2.1% smaller than in the final quarter of 2019. As a result, the pound slumped to its lowest level of 2021 against the dollar on Thursday. Many economists had forecasted stronger figures for growth and now predict slow progress over the next 6-9 months.

October to see inflation hit 4%

The City expects the inflation rate to have increased from 3.1% in September to 4% in October – twice the Bank of England’s 2% target. Some economists are further predicting that inflation could actually hit 5% by April 2022. The BOE however is still of the opinion that this period of inflation will be transient and will pass. It remains to be seen.

UK business surveys point to Bank of England rate rise in December

The flash purchasing managers’ index published on Tuesday by IHS Markit and the Chartered Institute of Procurement and Supply revealed that almost two-thirds of private sector companies reported rising costs in November. This indicates the steepest rate of input price inflation in more than 2 decades, driven by higher wages and bills for fuel, energy and raw materials. However, despite supply shortages and rising price pressures activity remained strong with output across the services and manufacturing sectors virtually unchanged from October’s reading of 57.8, signalling a healthy rate of expansion.

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*Sources: City AM, Reuters, EY, The Times, NACFB, Financial Times