Economy beginning to pick up, says governor

THE governor of the Bank of England has said the UK economy is beginning to pick up, ahead of crucial gross domestic product (GDP) figures being released which could show the country tipped into a recession at the end of last year.

Andrew Bailey told the House of Lords Economic Affairs Committee: “We will find out whether we had a so-called technical recession or not, depending on what the fourth quarter number is. In our February Monetary Policy Report it was in the balance – we didn’t have a recession in the forecast, but it is at best flat, in the view we took. It wouldn’t take much to tip it either way, frankly.

“Going forward, and I think this is in some ways more significant, we are now seeing some signs of the beginning of a pick-up in some of the surveys, for instance... we’ve got a modest pick-up this year which continues thereafter.”

The Office for National Statistics will today reveal whether or not the UK economy has contracted for the second quarter in a row in the final three months of 2023, with most economists forecasting a 0.1% decline in GDP between October and December.

This would follow a 0.1% contraction in the previous three months, after a downward revision against the zero growth initially estimated. A contraction in the fourth quarter would mean the UK tipped into a technical recession, as defined by two or more quarters in a row of falling GDP.

Experts have said that if confirmed, it would be a recession in the “mildest of senses” and is likely to be short-lived, with many preferring to describe the UK’s economy as having “stagnated”. But a recession would deal a blow to Mr Sunak who has promised to grow the economy as one of his five priorities.