What the Experts Are Saying About the UK Economy

UK GDP ESTIMATE: A triple-dip recession could be on the cards, the UK is edging closer to losing its AAA rating, and yet markets hover around 5-year highs

Holly Cook 25 January, 2013 | 11:23AM
Facebook Twitter LinkedIn

Numbers released by the Office for National Statistics on Friday morning revealed the UK economy shrank 0.3% in the final three months of 2012. Though this is only a preliminary estimate and is therefore subject to adjustment as more data comes through, it represents the fourth contraction in the last five quarters and is worse than many economists had expected. Economic growth was flat in the fourth quarter compared to the same period in the previous year.

Yet despite a consensus forecast of a contraction of 0.1% rather than the 0.3% announced today, the UK stock market remains in positive territory on the day and continues to hover around five-year highs. The implication is that investors are either not surprised by the number or they just don’t care. Indeed, there is a sense in the market that many have drawn a line under 2012 and are looking forward into 2013 with renewed optimism.

The FTSE 100 is currently trading within a few points of its level five years ago and yet this latest estimate shows GDP in 2012 was 2.3% lower than it was in 2007. If ever there was a tangible sign that economic growth does not necessarily equate to equity market performance, this is it.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Holly Cook

Holly Cook  is Manager, Morningstar EMEA Websites