Following the release of the latest GDP quarterly national accounts from the Office for National Statistics, Lindsay James, investment strategist at Quilter Investors, has shared her analysis with us as follows:
“With UK GDP growth having shown no growth in the latest data covering the month of April, news that the better growth rate of 0.6% in the first quarter has been upgraded marginally compared with earlier readings will do little to enthuse investors. The Bank of England expects a more modest growth rate of 0.2% in the second quarter, which although forecast before the announcement of the election and indeed the publication of the better than expected Q1 figures, may end up being close to the truth as recent surveys have indicated a pause in spending decisions within the crucial services sector during the election period.
“The second half of 2024 seems likely to be slow to change gear, despite the energy of a probable new government, with any noticeable changes not likely to be felt until 2025. However attention is already shifting, at the margins at least, to UK equity markets which not only trade at near record discounts to US equities but have also prompted bid speculation in companies ranging from Anglo American to Royal Mail and John Wood Group, to name just a few. Whilst the many obstacles that have held back our home market remain, valuations have seemingly become too tempting for international investors to ignore.
“With the wet spring that has firmly held back the retail sector finally giving way to warmer weather and interest rates likely to be heading down by year end, it could well be that better growth lies ahead. However until the next Budget makes both taxation and spending plans clear, businesses are unlikely to invest at scale, delaying any meaningful acceleration in GDP growth yet further.”
