The UK economy grew in November thanks to the World Cup and despite gloomy expectations that the country would be in recession.
Gross domestic product, the total output of goods and services, unexpectedly rose 0.1 percent this month, according to the Bureau of National Statistics.
According to the ONS, World Cup football games boosted bar and restaurant revenues and helped offset the impact of union action.
The numbers mean the UK has likely managed to avoid a recession in the final months of 2022. The ONS said December GDP would need to fall by about 0.5 percent to set a contraction in the fourth quarter.
“With a tailwind, the UK can now avoid a recession despite massive strikes in December and weak economic activity polls,” said Liz Martin, an economist at HSBC.
The rarely good economic news continued as the FTSE 100 leading stock index closed at 7,844.07, its highest level since May 2018.
“The unexpected GDP growth in the UK has given the market a welcome boost,” said Sophie Lund-Yates, an analyst at Hargreaves Lansdown.
She added that declining US inflation and a range of positive results announced by the likes of Tesco, Marks & Spencer and Sainsbury’s also helped revive sentiment. The possibility of a breakthrough in UK-EU trade relations and progress in negotiations between employers and striking workers fueled optimism.
“Ultimately, it looks like economic activity and discretionary spending are holding up much better than expected. The recent rise of the FTSE has been a welcome relief for the British brand, which has been hit hard in recent years,” said Ms Lund-Yates.
Economists say it is now less clear whether the UK entered a recession at the end of last year.
Kitty Asher of the Institute of Directors said: “This is more activity than expected in November and will add to the improvement in market sentiment we have seen in recent weeks.
“Knowing that the economy continued to grow in October, there is no longer any certainty that it will meet the technical definition of a recession when final data for 2022 is available.”
Other analysts were more confident. “Consumer spending is likely to decline as pressure on real household income increases, so we continue to expect GDP to contract in the first three quarters of this year,” says RSM UK’s Thomas Pugh.
Shadow Chancellor Rachel Reeves said: “The World Cup is not a growth strategy. And a growth strategy is what we need from this government.”
Source: I News
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