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UK Q4 GDP: How to Avoid a Recession


Tomorrow, there will be plenty of UK data available before the market opens. However, the most important will likely be the first glimpse at the GDP figures from the previous quarter. That could be the make-or-break instance for the BOE and even the government’s policy, and could set up how the pound performs in the near future.

Back in October, the BOE and the government acknowledged the country was already effectively in a recession, even though it hadn’t reached the technical definition. This was after the third quarter saw negative GDP growth. It was expected that the fourth quarter would also show negative GDP growth. The comparables created a situation that was unusual and could have the country technically avoiding a slump.

It’s all about the comparables

There is consensus among expectations that the UK will release preliminary Q4 GDP figures of 0.1% quarterlyThis is compared to the -0.3% recorded in the third quarter. On an annual basis, however, the economy is expected to slow down. The expected annual GDP will be 0.2%, compared with 1.9% in the past. This is basically stagnation.

Here’s where the comparables come in. With a drop in economic activity in the prior quarter, a small “correction” could include a positive reading in the last quarter. But, 0.1% growth after -3.0

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