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UK Economy Seen Sputtering Below Pre-Pandemic Levels Until 2024

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(Bloomberg) — The UK will avoid a recession this year, but sluggish growth means the economy will not recover to pre-pandemic levels until the final quarter of 2024, according to the British Chambers of Commerce.

The business lobby group upgraded its outlook sharply following better than expected household spending and investment by firms at the end of 2022, but the economy will still shrink 0.3% this year. In its last quarterly forecast, the BCC expected a 1.3% contraction this year.

The improved outlook, which is better than projected by the Bank of England and the Office for Budget Responsibility, comes just days ahead of the budget, when Chancellor of the Exchequer Jeremy Hunt faces difficult choices between driving growth and keeping debt under control.

The BCC urged the government to encourage business to invest or risk the UK being “left behind by our competitors.”

Business investment recovered to pre-pandemic levels at the end of last year, but the BCC expects very weak spending growth of just 0.2% in 2023.

Companies face a jump in corporation tax from 19% to 25% from April, a business rates revaluation and higher interest rates this year.

“There is currently little incentive for firms to risk plowing their dwindling cash reserves or fresh loans into new projects,” said Alex Veitch, the BCC’s director of policy.

Hunt is believed to be considering big tax breaks for companies when they invest to replace the super-deduction, which saves companies 25 pence on their tax bill for every £1 invested.

“Although the economy should now avoid a technical recession, the stark reality is that businesses face a very difficult year ahead,” he said. “Businesses tell us they are most concerned about the difficulties in recruiting staff, paying their energy bills and rising taxes.”

The BCC forecasts the economy to grow 0.6% in 2024 and 0.9% in 2025, and for interest rates to end 2023 at 4.25%, just a quarter of a percentage point higher than the current rate, then fall to 3.25% by the end of 2025.

Inflation will fall to 5% by the end of the year, just meeting the government’s promise of halving it from 10.1%. Unemployment is expected to jump from 3.7% to 4.5% this year and to 4.8% in 2024 before dipping to 4.1% in 2025 .

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Economy

S&P/TSX composite gains almost 100 points, U.S. stock markets also higher

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September 13, 2024

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TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.

The S&P/TSX composite index closed up 93.51 points at 23,568.65.

In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.

The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.

The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.

The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

Statistics Canada reports wholesale sales higher in July

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September 13, 2024

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OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.

The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.

The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.

The personal and household goods subsector fell 2.5 per cent to $12.1 billion.

In volume terms, overall wholesale sales rose 0.5 per cent in July.

Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.

This report by The Canadian Press was first published Sept. 13, 2024.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 150 points, U.S. stock markets mixed

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September 12, 2024

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TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 172.18 points at 23,383.35.

In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.

The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.

The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.

The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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