It was good news for the UK this morning when at 09.30GMT it was announced that gross domestic product for the United Kingdom was sitting at the increased growth rate of 1.9% for 2013 in total. UK GDP saw increases in all four quarters last year which is an achievement not seen since 2007.
Q4 saw an increase of 0.7%, and overall we’re looking at the strongest rate for about six years. This, combined with last week’s data release that the UK’s unemployment level has been reduced to 7.1%, is certainly encouraging in terms of Britain’s economic recovery process. UK manufacturing increased 0.9% in the final quarter of 2013, whilst industrial production gained by 0.7% and agriculture saw a rise by 0.7%.
By comparison to economies on the mainland, the UK was the fastest growing economy in Western Europe in 2013, beating Germany – the much-touted powerhouse – by four fold in terms of growth, all of which bodes well for the UK’s progress in general and for traders looking to take on board more Sterling in coming weeks.
Talk will now centre on what the Bank of England (BoE) referred to last week as monetary policy “evolutionâ€: with UK interest rates at a record low of 2%, thoughts turn to BoE sentiment last year that suggested that a rate hike would be necessary when unemployment drops to 7% or less. With the unemployment rate now at 7.1%, the BoE has been quick to point out that the 7% level is rather a benchmark than an automatic trigger for interest rate hikes, but, crucially, they need to devise policy in the event that unemployment reduces further and then put measures in place to increase interest rates with the aim of sustainable economic recovery.
Courtesy of Charlie Murray, FC Exchange
