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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Rail fares in England to rise 4.9%; UK economy on brink of recession; US PCE inflation slows – as it happened

GDP United Kingdom Economy United States Jeremy Hunt Eurostar London Office for National Statistics The Bank of England
Passengers at King's Cross railway station in London yesterday, as Storm Pia caused transport disruption.
Passengers at King's Cross railway station in London yesterday, as Storm Pia caused transport disruption. Photograph: Xinhua/REX/Shutterstock

Closing post

Right, with London’s stock market closed until the 27th December, it’s time to wrap up for today.

And what a day it has been, with Britain’s economy sliding closer to the long-feared recession after growth fell slightly in the July-September quarter.

Should the economy also contract in October-December, the UK will be in a technical recession.

Here’s the full story, and our analysis:

Here’s our news story on the latest fare rises which will hit passengers in England next March:

And here’s the rest of today’s stories:

We’ll be back after the festive break, next week. Have a lovely Christmas! Good luck if you’re trying to get home. GW

Over in New York, the S&P 500 index of US stocks has opened a little higher, as investors welcome the drop in the US PCE inflation measure:

Larry Elliott: GDP downgrade shows economy going nowhere

The UK is perilously close to meeting the technical definition of a recession after GDP shrank in July-September, our economics editor Larry Elliott writes, adding:

Whether or not a recession materialises, the bigger picture is that since growing by 0.5% in the first quarter of 2022 the economy has gone nowhere. In the second and fourth quarters of 2022 it grew by 0.1%; in the third quarter it fell by 0.1%. Growth of 0.3% in the first three months of 2023 has been followed by the weakness in the second and third quarters.

The GDP figures are bad news for Rishi Sunak. At the start of 2023, one of the prime minister’s five pledges was that he would have the economy growing by the end of the year. That pledge has not been met, and it will be of little comfort to the prime minister that other European countries are also recession candidates.

More here.

The dollar has slipped to a near five-month low against a basket of other currencies, after the US PCE inflation measure fell by more than expected today.

That indicates traders believe softer inflation will pave the way for cuts in US interest rates next year.

The pound is up 0.3% to $1.273.

UK car dealership Lookers may cut 945 jobs

Workers at UK car dealership Lookers have just received some sickening pre-Christmas news.

Lookers said today it may cut about 945 jobs, or 14.5% of its total workforce, as part of an ongoing strategic review following a deal to sell itself to Global Auto Holdings, Reuters reports.

Lookers, which sells new and used cars and vans, in July agreed to a buyout offer of £504.2m from Global Auto, the entity related to privately owned Canadian car dealer Alpha Auto Group.

The company said in a statement that:

“(Global Auto and Lookers) have to date identified areas that require restructuring and which will require a redundancy programme to be undertaken,”

Mark Raban will step down as CEO and Oliver Laird as CFO, Looker said.

US PCE inflation measure falls

There’s still time for more important economic data before we shut down for Christmas.

And over in the US, the Federal Reserve’s favourite inflation measure has just shown that price pressures are easing.

The PCE price index measure rose by 2.6% in the year to November, down from 2.9% in October. On a monthly basis, prices fell by 0.1% during November.

Core PCE (which excludes food and energy) slowed to an annual rate of 3.2%, down from 3.4% in October. That may cheer the Fed, as it looks for signs that it is winning the battle against inflation.

Updated

Tina McKenzie, Policy Chair at the Federation of Small Businesses (FSB), says the 4.9% increase in English rail fares announced today is “unfortunate” – and that firms will want see the money used to improve the rail services.

McKenzie explains;

“Rail is essential for small businesses and the self-employed, providing transport for employees, suppliers and customers. For small business owners who are already shouldering numerous rising costs, any increase is unfortunate and is not the festive gift they were hoping for as we head towards Christmas.

“While the annual fare change is lower than using the normal formula linked to the previous summer’s inflation rate, 4.9% is still significantly above the current level of inflation at 3.9% and so passengers and commuters will still feel the pinch. We would urge ministers to bear down on future rises so that staff, contractors and visitors to small businesses can viably continue to choose rail to move around the country.

“After the cancellation of HS2, and with small firms now set to take the strain of another fare rise in Spring, they will be looking to ministers to show that money raised from the price hikes makes tangible changes that significantly improves their journeys.

“We want to see available and reliable services, as well as a joined-up system that works alongside other transportation, and a restructured and affordable ticketing system.”

London stock market closes early for Christmas

London’s stock market has closed for Christmas, although we didn’t get much of a Santa Rally today.

The FTSE 100 index of blue-chip shares has closed just 2.8% higher tonight at 7697, up 0.04%.

Retail stocks dragged on the index, after Nike alarmed traders by revising down its sales forecast last night. JD Sports remained the top faller, down 5.1%.

The more UK-focused FTSE 250 index of medium-sized stocks gained 60 points, or 0.3%, even though the UK economy is on the brink of recession.

Danni Hewson, AJ Bell head of financial analysis, says:

“Santa might be coming to town, but investors aren’t really feeling the festive spirit.

“Gloomy UK data and one eye on core inflation numbers due out in the US later are sending stocks lower.

“It’s no surprise to see a whole host of retailer’s shares tumbling this morning with JD Sports and Frasers group two of the biggest losers.

“Both are also likely to be feeling the whiplash from Nike’s dismal predictions and its plans to shave a whopping $2 billion of costs in a bid to shore up its finances.

“Sales over the last quarter have looked rather subdued as retailers kept backroom stock levels low and the Chinese consumer turned to domestic competitors as relations between the US and China remained frosty.

“Nike has an incredibly powerful brand but it has saturated the market, so cutting back on the number of products it makes would seem sensible and could create more hunger for its products from an uber savvy consumer.”

The TUC have accused the government of being “tone deaf” to ongoing cost of living crisis, by signing off a 4.9% rise in rail fares in England next year.

TUC General Secretary Paul Nowak said:

“Today’s excessive hike sums up everything that is wrong with our rail network.

Ministers are tone deaf to the ongoing cost-of-living crisis that remains a real burden on working people right across the economy.

UK passengers are already paying the highest fares in Europe in return for late-running, overcrowded and routinely cancelled trains.”

Watchdog London TravelWatch is calling for reforms to the UK rail fare system, following the news of a 4.9% price hike in England from March.

A spokesman for London TravelWatch said:

“These new rail fares will see already hard-pressed passengers hit with another unwelcome price hike.

“Reform to rail fares and ticketing could not be more urgent now.

“Government needs to set out an alternative vision that makes public transport appealing – this includes affordable fares, rolling out contactless payment options, and improving train service punctuality so passengers are getting real value-for-money.”

Updated

The 4.9% increase announced today relates to regulated fares, which make up around 45% of rail fares.

They include commuter fares such as season tickets and shorter distance peak singles and returns, and also longer-distance off peak singles and returns.

Unregulated fares are set by train operators, although their decisions are heavily influenced by the Government due to contracts introduced following the coronavirus pandemic.

Updated

Rail fares to rise by 4.9% from next March

More transport news: rail customers in England can expect many rail fares to rise by almost 5% next spring.

The Department for Transport has announced that regulated rail fares in England will increase by up to 4.9% from March 3 next year.

Rail passengers may question whether the service is 4.9% better (especially if they were caught up at the chaos at Euston yesterday).

But the government points out that this is a smaller rise than a year earlier, when fares rose by 5.9%.

They are calling today’s announcement “a significant intervention”, as the increase is lower than last summer’s inflation rate, which has been used to set rail fares in the past.

Transport Secretary Mark Harper said:

“Having met our target of halving inflation across the economy, this is a significant intervention by the Government to cap the increase in rail fares below last year’s rise.

“Changed working patterns after the pandemic mean that our railways are still losing money and require significant subsidies, so this rise strikes a balance to keep our railways running, while not overburdening passengers.

“We remain committed to supporting the rail sector reform outdated working practices to help put it on a sustainable financial footing.”

Regulated rail fare increases have traditionally been linked July’s reading of the retail prices index inflation measure, which was 9.0%.

The UK are also making changes to protect Britain’s small mammals, by relaxing rules around where small wildlife warning signs can be put up.

The DfT has also spruced up the small animal warning sign, adding white quills to the hedgehog’s back to make it more noticable.

Harper announced the move on a visit to Tiggywinkles Wildlife Hospital in Buckinghamshire….

Updated

The broader picture for the UK economy is significantly bleaker than suggested by the 1.3% month-on-month rise in retail sales in November (see 7.10am post), says Cameron Misson, economist at the CEBR.

Misson explains:

“November’s rise in retail sales were markedly stronger than consensus expectations, which will be welcome news for the sector ahead of the all-important festive period.

The contraction in output in Q3 2023 suggests that the economy is on the verge of a technical recession. Cebr previously forecasted a technical recession across Q4 2023 and Q1 2024, however, today’s downward revisions suggest that the contractionary period has started one quarter sooner than expected.”

At the risk of dampening the Christmas mood further, London Underground workers ae set to stage a series of strikes in the new year in a dispute over pay.

Members of the Rail, Maritime and Transport union (RMT) have voted overwhelmingly to take industrial action over a 5% pay offer.

Engineering and maintenance workers will be taking action over January 5/6, with no rest-day working or overtime until January 12.

London Underground control centre and power/control members will be taking action over January 7/8, and fleet workers will walk out on January 8.

Signallers and service controller members will take action on January 9 and 12 while all fleet, stations and trains grades will walk out on January 10.

RMT general secretary Mick Lynch said Tube workers who help bring “vast amounts of value” to the London economy were not going to put up with senior managers and commissioners “raking it in”, while they were given “modest below-inflation offers”.

Similar planned strikes have been called off in recent months; in October, a walkout was cancelled after negotiations at Acas made progress. But if not, commuters and Londoners could face a tricky start to the new year.

Joshua Mahony, chief market analyst at Scope Markets, says the -0.1% drop in UK GDP in the third quarter is a warning that we could yet see the widely anticipated UK recession in 2023.

Mahony adds:

A year ago, markets were looking towards the UK as a likely source of economic weakness, with both the IMF and Bank of England predicting the UK economy to shrink over the course of 2023. For the most part the UK has outperformed expectations, with the Germany instead looking at risk of a recession this year.

Nonetheless, the third quarter -0.1% decline now sees the UK treading the same pathway as the German, French and wider eurozone economies.

From a monetary policy standpoint, this does feed into the narrative that we will see a more dovish narrative from the ECB and Bank of England, with the current growth and inflation trajectory allowing for a pivot next year.

China’s BYD announces Hungarian electric vehicle factory

Chinese Tesla rival BYD has said it will build a new vehicle factory in Hungary, in a sign of the carmaker’s increasing focus on the European market, my colleague Jasper Jolly writes.

The manufacturer, which is the world’s second-largest producer of electric cars, said it would create thousands of jobs in the city of Szeged, southern Hungary, in a statement on its official WeChat account on Friday morning.

BYD, which is backed by US investor Warren Buffett, is one of the companies leading the race to dominate the industry for electric vehicles as countries rapidly move away from fossil fuel cars. It has set its sights on being the biggest seller of electric cars in Europe.

The manufacturer already produces a wide array of products in China, ranging from hybrid cars that combine a battery and an internal combustion engine, to buses and lorries powered by its batteries. It is also a key supplier of batteries to other car companies.

However, its planned assault on the European car market has caught the attention of local rivals as well as European politicians who fear that jobs could be lost to China.

The EU has launched an investigation into Chinese state subsidies for electric vehicles, a move that could eventually allow it to impose restrictions on imports. A factory within the EU could allow BYD to avoid some measures. BYD’s talks with the Hungarian government were first reported by the Financial Times.

BYD already has a bus factory in Hungary. Some analysts expect it to overtake Tesla as the world’s biggest maker of pure battery electric vehicles. It already makes more cars than Tesla when including hybrids.

Bloomberg’s Tom Rees points out just how poorly the UK economy has done this year:

Full story: UK at risk of recession after economy shrinks in third quarter

Fears that the UK has fallen into recession have been heightened after official figures were revised to show that the economy shrank slightly in the July to September period.

The assessment that gross domestic product (GDP) fell by 0.1% in the third quarter – down from the previous estimate of no growth – will be a blow to Rishi Sunak, who has promised to get the economy growing as one of his fives pledges to voters before an expected general election next year.

The Office for National Statistics (ONS) said a poorer than previously assessed performance by small companies, film production, engineering and design and telecommunication and the IT sector accounted for much of the revision.

More here.

TUC General Secretary Paul Nowak has warned that the UK economy is in a “doom loop”, after GDP shrank by 0.1% in July-September.

Nowak says:

“This year ends with another set of dismal growth figures and with the UK teetering on the brink of recession.

“We can’t go on like this. Our economy is stuck in a doom loop and working people are paying the price as unemployment rises and living standards fall.

“The Conservatives got us into this mess. They don’t have a plan for getting us out of it.

German house prices in record 10.2% fall

Economic warning lights are also flashing in Germany this morning.

House prices in Europe’s largest economy have fallen at the fastest rate in at least 23 years, plunging by 10.2% year-on-year in the third quarter of 2023.

That’s the fastest decline in residential property prices compared to a previous quarter since the time series began in 2000, following a 6.8% drop in Janary-March, and 9.6% in April-June.

Statistics body Destatis has also reported that new orders in Germany’s construction sector slumped by 6.3% in October, month-on-month.

This was driven by a 14.9% drop in building construction, which more than countered a 2.4% rise in civil engineering orders.

Over in the stock market, shares in UK retailers are sliding in early trading, after gloomy financial results from Nike last night.

JD Sports is leading the FTSE 100 risers, down 5%, while Frasers (which owns Sports Direct) is down 1.3% and discount retailer B&M has lost 1%.

Last night, sportswear giant Nike cut its annual sales forecast blaming cautious consumer spending, a weaker online business and more promotions, and said it would cut costs by $2bn over the next three years.

Victoria Scholar, head of investment at interactive investor, explains:

“Nike has cut its full-year sales forecast, sending shares sharply lower, down by nearly 12% after hours, wiping out its gains from the past month. It expects fiscal full-year revenue to increase by around 1%, below its previous guidance and analysts’ estimates for around 3-4%. It reported quarterly net income of $1.6 billion, beating estimates but revenue hit $13.39 billion, just shy of estimates.

The sportswear giant is aiming to achieve $2 billion in savings over the next three years and it is launching new styles to try to boost customer demand. Nike said there was a ‘bifurcation’ in performance with some periods of weakness and others of strength, particularly around key shopping events like Singles Day and Black Friday.

Currently, the FTSE 100 share index is up just 2 points, or 0.03% – so not much sign of the traditional Santa rally….

The UK economy is on both the naughty and nice list following this morning’s data, says Investec economist Ellie Henderson.

Henderson says this morning’s national accounts (showing a fall in GDP), and November’s retail sales figures (showing 1.3% month-on-month growth), are “a tale of two halves”, adding:

The national accounts release indicated an economy which is progressing slower than was first reported, making a winter recession far more likely, but the retail sales report for November sprinkled a little bit of festive cheer, blasting past consensus.

On the GDP side, growth in Q3 has been revised down, now reporting negative quarterly growth, at -0.1%. Although this means a winter recession is far more probable, this really is a matter of semantics: to two decimal places, the original release had in fact already shown GDP to have contracted by -0.03%.

The story remains that economic growth has been subdued. Quarterly GDP growth for Q2 was also revised down, now reporting no growth on the quarter (prior: +0.2%).

Professor Costas Milas, of the Management School at the University of Liverpool, has spotted another worrying point in today’s GDP report:

Today’s GDP revision, which indicates the potential start of a recession in the third quarter of 2023, will worry policymakers for an additional reason: the ONS has revised downwards 2023Q3 four-quarter GDP growth by 0.3 percentage points (from 0.6% to 0.3%, that is). Historically (from 1973 onwards, that is), the ONS has revised four-quarter GDP growth upwards by an annual average of 0.7 percentage points!

Today’s GDP reading goes against the historical “norm” which adds extra uncertainty about the future outlook of the UK economy and, in my view, strengthens the voice of those, including myself, who believe that an interest rate cut will be on the cards by March 2024!

The fall in UK GDP in July-September will reinforce expectations in the City of London that the Bank of England will cut interest rates several times in 2024.

This morning, the money markets are predicting that UK interest rates will be cut by 1.4 percentage points in 2024.

That implies that rates could be cut as low as 3.75% by December 2024, down from 5.25% today.

Today’s quarterly national accounts shows that GDP per head shrank by 0.3% in July-September, worse than the headline fall of 0.1% in GDP.

In April-June, when the economy stagnated, GDP per capita fell by 0.1%.

Updated

Today’s updated GDP report shows that household spending fell in July-September.

There was a fall of 0.5% in real household expenditure in Quarter 3 2023, revised down from a first estimate fall of 0.4%, the ONS says.

This was driven by lower spending on miscellaneous goods and services, spending on restaurants and hotels, spending on food and non-alcoholic drink, and spending on furniture and household equipment.

Several experts are warning that the UK is at real risk of a “technical recession” – defined as two quarters of falling GDP in a row.

Here’s Interactive Investor’s Victoria Scholar:

And Sky News’s Ed Conway:

However… definitions of a recession vary, with some analysts arguing that it means more than just a few months of contraction.

In the US, the National Bureau of Economic Research gets to decide when the US economy is in recession – and can make this declaration long after the downturn has actually hit.

The Financial Times now takes the same approach – here’s the FT’s Chris Giles.

Today’s GDP downgrades show that Britain has barely avoided a recession so far this year.

Richard Carter, head of fixed interest research at Quilter Cheviot, warns that growth is moving in the wrong direction (given we also know GDP shrank in October).

Carter says:

“ONS data this morning reveals UK GDP fell by a surprise 0.1% in Q3 compared to the previous quarter, revised down from a first estimate of no growth, highlighting just how much of a strain there currently is on the UK economy.

Q2 was also revised down and is now estimated to have shown no growth compared to the 0.2% increase previously estimated, meaning the UK has barely scraped by without a recession in 2023.

“Growth is weakening and interest rates are really beginning to bite and while a recession has just been avoided to date, there is no guarantee one will be avoided in 2024. You just have to look at October’s -0.3% reading to see that growth is trending further in the wrong direction. Inflation has eased more than anticipated and interest rate predictions are suggesting more easing than originally thought in 2024, but the damage may already have been done.

Certainly, Rishi Sunak’s pledge to grow the economy is now severely in doubt.

Capital Economics: Mildest of mild recessions may have begun in Q3

The 0.1% fall in real GDP in Q3 may mean that the mildest of mild recessions started in Q3, says Ashley Webb, UK economist at Capital Economics.

Webb adds:

But whether or not there is a small recession, the big picture is that we expect real GDP growth to remain subdued throughout 2024.

Updated

Reeves: Sunak has failed to grow economy

The news that Britain’s GDP shrank in July-September means Rishi Sunak will end the year having failed to deliver on his pledge to grow the economy, Labour says.

Shadow chancellor Rachel Reeves says:

“Rishi Sunak is a Prime Minister whose legacy is one of failure. He failed to beat Liz Truss, he failed to cut waiting lists, he failed to stop the boats and now he has failed to grow the economy.

“Thirteen years of economic failure under the Conservatives have left working people worse off with higher bills, higher mortgages and higher prices in the shops.

“It’s time for change. The Labour Party, led by Keir Starmer, has a long-term plan to grow the economy and make working people better off.”

Hunt: Medium-term outlook is far more optimistic than GDP numbers suggest

Chancellor Jeremy Hunt has claimed that the medium-term outlook for the UK economy is “far more optimistic” than today’s GDP data shows.

Hunt adds:

“We’ve seen inflation fall again this week, and the OBR (Office for Budget Responsibility) expects the measures in the autumn statement, including the largest business tax cut in modern British history and tax cuts for 29 million working people, will deliver the largest boost to potential growth on record.”

ONS: Economy has changed little over last year

ONS Director of Economic Statistics Darren Morgan says that Britain’s TV and film industry had a worse time in July-September than first estimated.

Explaining why GDP has been revised down this morning, Morgan says:

“The latest data from both our regular monthly business survey and VAT returns show the economy performed slightly less well in the last two quarters than our initial estimates. The broader picture, though, remains one of an economy that has been little changed over the last year.

“The latest VAT data, which takes a little time to receive and process means we now estimate the economy showed no growth in the second quarter, with weaker performances from smaller businesses, particularly those in both hospitality and IT than first shown.

“We also now estimate the economy contracted slightly in the third quarter, when we previously reported no growth, with later returns from our business survey showing film production, engineering & design and telecommunications all performing a little worse than we initially thought.”

We have been covering the struggles in the UK’s film production sector in recent months, which has forced some workers to seek other jobs:

Updated

The ONS has also reported that retail sales volumes across Great Britain rose by 1.3% in November 2023.

That follows no growth in October (revised from a fall of 0.3%).

Darren Morgan, director of economic statistics at the ONS, said:

“Retail sales grew strongly in November as heavy Black Friday discounting encouraged shoppers to spend. However, with the three-month trend continuing to fall and overall sales still below pre-pandemic levels, it’s still a challenging time for retailers.

“In the latest month, household goods retailers, clothing shops and department stores all reported robust sales, with computer stores, sports equipment, toy shops and cosmetics stores particularly benefitting from the impact of their Black Friday promotions.

“Supermarket sales ticked up a little, but it was specialist food and drink stores that had a really strong November due to customers stocking up early for Christmas and spending more than we have traditionally seen at this time of year.”

Updated

UK economy shank in Q3, raising recession risk

NEWSFLASH: The UK economy is on the brink of recession, after new data shows GDP shrank slightly in the third quarter of the year.

The Office for National Statistics has revised down its estimate for the economy in July-September.

It now estimates that UK GDP fell by 0.1% in the third quarter of 2023, down from the previous estimate of no growth.

The downgrade is because the UK services sector is now estimated to have fallen by 0.2% in the third quarter of 2023, revised down from a first estimate fall of 0.1%.

The ONS says:

In output terms, there was a 0.2% fall in the services sector in the latest quarter, which offset a 0.4% increase in construction output and a 0.1% increase in the production sector.

In another blow, GDP is now estimated to have shown no growth in Q2, revised down from the previous estimate of +0.2% growth.

A technical recession is two quarters of contraction in a row, so if GDP falls in October-December, the UK will be in recession.

We already know that the economy shrank in October, by 0.3%,

Updated

The latest healthcheck on the UK property sector shows that sales and demand across the UK were almost a fifth higher in the final weeks of 2023 than a year earlier as sentiment improved.

My colleague Julia Kollewe reports:

The property website Zoopla said new sales agreed were 17% higher in December than this time last year, when higher mortgage rates hit market activity. Demand is up 19%, measured by would-be buyers contacting agents to inquire about and arrange viewings for a specific property listed on Zoopla. An increase in the number of homes for sale is increasing choice and supporting sales, it said.

Zoopla recorded an annual house price fall of 1.1% across the country this month, with a steeper drop in London, of 1.5%, to an average price of £536,800. In the capital, prices were up 0.3% in the City while Croydon, Bromley and Woking posted the biggest price declines, of 3.5%, 3.4% and 2.8% respectively.

More here.

Updated

UK auto sector posts best November car output since 2020

In a boost to the UK economy, Britain’s car industry has posted its best November output since 2020.

UK car production grew by 14.8% in November with 91,923 cars leaving factory gates, the Society of Motor Manufacturers and Traders reports.

Production was lifted by easing supply chain problems, and increased demand from abroad.

The SMMT says:

Production for both the home and overseas markets increased, up 13.4% and 15.2% respectively. 22,919 cars stayed in the UK though, as always, exports drove volumes.

Export growth was driven mainly by the EU, China and Turkey, although Europe received by far the bulk (60.8%) of all shipments, reinforcing the need for tariff-free electrified vehicle trade across the Channel.

Overnight, UK chancellor Jeremy Hunt applied a little pressure to the Bank of England to consider cutting interest rates in 2024.

Speaking to the Financial Times yesterday, Hunt suggested that the BoE could start to reduce borrowing costs next year, saying:

“There’s a reasonable chance that if we stick to the course we’re on, we’re able to bring down inflation, the Bank of England might decide they can start to reduce interest rates.

That probably is the moment when people will begin to have more confidence about their own personal prospects and the prospects of their family.”

Hunt also hinted at tax cuts next year, telling Bloomberg that falling debt interest costs may give him the necessary headroom.

2024, of course, will almost certainly be an election year (unless Rishi Sunak hangs on until January 2025), so the government may hope that falling interest rates and cuts to the tax burden would revive their approval ratings.

Introduction: UK GDP and retail sales in focus

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

It’s the final day of stock market trading before Christmas, but there’s still time for an important update on the health of the UK economy.

At 7am, the Office of National Statistics (ONS) will publish its latest quarterly national accounts for the UK, giving detail into how the economy fared in July-September (Q3 2023).

The first estimate of third-quarter GDP was released last month, showing the economy stagnated. Today’s report will probably confirm that, City economists estimate. But it’s not impossible that the headline figure will be revised up, or down – and a downgrade would mean the economy shrinking, putting Britain on the brink of recession.

Dan Hanson, senior UK economist at Bloomberg Economics, warned earlier this week that there is a chance of a downgrade.

“The ONS is likely to confirm that GDP stagnated in the third quarter, but we do think there is some risk output is revised lower.

The first estimate showed GDP fell, just not by enough to tip the rounding, and since then the retail sales data has been revised down. The statistics wouldn’t need to find much more weakness for GDP to register a 0.1% fall.”

The ONS will also release the latest retail sales figures at 7am, with economists predicting a 1.3% fall, year-on-year, in November, as households cut back amid the cost of living squeeze.

Also coming up today

Britain’s transport network will be doing its best to get passengers home for Christmas, after yesterday’s turmoil.

The strike which suddenly halted Eurostar trains running between London and Paris was ended last night, as unions reached an agreement with management.

Eurostar is promising to run six extra trains between Paris and London into the weekend – an extra two trains each on Friday, Saturday and Sunday.

Passengers hoping to travel from London Euston could continue to face disruption after services were cancelled on Thursday following damage to overhead electric wires.

The agenda

  • 7am GMT: GDP quarterly national accounts, UK: July to September 2023

  • 7am GMT: Retail sales across Great Britain for November

  • 1.30pm GMT: Canadian GDP for October

  • 1.30pm GMT: US PCE index of inflation for November

Updated

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