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UK economic growth to rebound in late 2024

14:03, 23rd January 2024
Justin Waite
Taking Stock
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Taking Stock on Tuesday 23rd January 2024

UK economic growth to rebound in late 2024, leading forecaster says

The UK economy will benefit from falling inflation and lower interest rates in the second half of the year, boosting growth and allowing the government to offer pre-election giveaways, according to a study by leading forecaster the EY Items Club.

An increase in gross domestic product of 0.7% in 2024 made in the firm’s autumn forecast was upgraded to 0.9%, while the UK economy is now forecast to grow by 1.8% in 2025, up from the 1.7% predicted in October.

Financial markets expect the situation to improve once inflation – which averaged above 6% in 2023 – falls as expected to 2% by April, and for the Bank of England to begin cutting interest rates in June.

A report by Lloyds Bank found that seven out of 14 sectors of the economy reported growing demand, as measured by new orders, in December 2023, more than twice as many as in November 2023.

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TOP BUSINESS STORIES

UK government borrowing falls to £7.8bn in December, boosting Jeremy Hunt’s tax cut hopes

Britain’s monthly government borrowing fell last month, potentially giving chancellor Jeremy Hunt more room for tax cuts in the March budget.

Figures just released by the Office for National Statistics show that the UK’s public sector net borrowing (excluding public sector banks) fell to £7.8bn in December.

That’s the lowest deficit for any December since 2019, just before the Covid-19 pandemic, and half as much as the UK borrowed to balance the books in December 2022.

It’s also a lot lower than forecast; economists polled by Reuters had expected public sector net borrowing, excluding state-owned banks, to hit £14bn.

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China "weighs stock market rescue package backed by $278bn"

In the financial markets, shares have rallied in China today on reports that Beijing is considering taking steps to stabilize the slumping Chinese stock market.

Bloomberg reported that policymakers are seeking to mobilize about 2 trillion yuan ($278 billion), mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilization fund to buy shares onshore through the Hong Kong exchange link

They have also earmarked at least 300 billion yuan of local funds to invest in onshore shares through China Securities Finance Corp. or Central Huijin Investment Ltd., people familiar with the situation said.

(Click here to read more)

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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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