September 2023 Economic Update

It’s still expected that the UK will escape a recession.

The UK economy did grow by 0.2% in the quarter to June 2023, according to the Office of National Statistics (ONS).  This was up from 0.1% in the previous quarter.  Monthly June actually grew by 0.5% compared to May.  This was a result of increased outputs from manufacturing and construction, as well as the reversal of the squeeze caused in May by the additional bank holiday.

The global environment is seen as more resilient and energy prices coming down is what’s seen to be ticking the economy on at the moment. Growth is expected to remain weak, at around 0.4% for the whole of 2023. 

Inflation is coming down, but at a slower rate than originally anticipated due to inferred fluctuations in the energy market.

The labour market remains tight, with the overall number of job vacancies continuing to reduce.  Hospitality, retail and manufacturing industries are reporting difficulties in recruiting staff.  The unemployment rate is expected to rise a touch as we head towards 2024.

The rate of business insolvencies hit a 14 year high in quarter 2 this year, with the highest number of business insolvencies since 2009, during the financial crisis.  The sectors experiencing the most insolvencies are construction, wholesale and retail trade, and accommodation and food services.

The Bank of England’s monetary policy team announced on 21st September that interest rates would remain at 5.25%.  Initial reports were that interest rates would increase again to 5.5%, however this isn’t currently the case – something that will be welcomed by businesses with financing and home owners with mortgages.