Despite some rather gloomy projections and the country’s economy contracting in August, the UK has avoided recession (for now) after showing growth that was better than expected in the three months to August. Despite weak manufacturing performance, the economy grew by 0.3% over the course of the three months, thanks in large part to the UK’s booming TV and film production industry.
Is the UK out of the woods?
In short, no. There’s still cause for concern when it comes to the UK’s economy, with Brexit casting a continual cloud over the country’s potential. The economy shrank by 0.1% in August – worse than the projected zero growth. While that doesn’t bode well, the Office for National Statistics reports that September’s economic performance would have to show a sharp contraction in order for the economy to shrink over the full July-to-September quarter. Many financial analysts were worried that might happen, following the economic contraction that occurred during the April-to-June quarter.
What does this mean for the markets?
As ever, the markets responded quickly to the latest economic news, with the FTSE 100 showing a solid performance and closing 0.28% higher following the announcement. The FTSE 250 closed 0.33% higher.
The UK’s markets have been particularly sensitive since the country voted to leave the EU back in 2016, and they are also responding to wider global economic and political news.
What does this mean for UK citizens?
For UK citizens, the news that the country is likely to avoid recession comes as a welcome relief in a time of unprecedented political upheaval. However, it does little to remove the day-to-day uncertainty that many people are facing as a result of the Brexit process. The drawn-out saga and the uncertainty that it brings are being felt across the country.
Not only that, but the UK’s millennials are already suffering financially, according to an international comparison report from the Resolution Foundation. Depressed incomes, falling levels of home ownership and job scarcity show that millennials in the UK are not only faring worse than their parents, but also worse than millennials in most other developed countries. Only Greece showed a more sizeable pay squeeze than the UK, based on the report’s findings.
Getting onto the housing ladder has become a major issue for the UK’s younger generations in recent years. The Mortgage Market Review tightened up lending criteria at the same time as wages were falling further and further behind the rising cost of living. Those facing issues of bad credit were even further affected, although online mortgage broker Trussle’s insights into bad credit mortgage rates show that there is at least some hope for young people who are facing financial difficulties. Indeed, specialist lenders can provide mortgages for those with poor credit and even high-street banks may be able to help.
That feeling of there being some hope on the horizon is something that the UK continues to cling to right now. The country is in turmoil in many ways and, while the latest figures show that a recession is unlikely, the prospect of difficult economic times is never too far from people’s minds.