Yael Selfin, KPMG Head of Macroeconomics at KPMG in the UK, comments on today’s release of preliminary Q3 GDP figures from the ONS.
Yael Selfin, KPMG Head of Macroeconomics at KPMG in the UK, says:
“Preliminary figures for Q3 GDP out today paint a picture of a resilient economy in the first quarter since the country voted to leave the EU. The UK economy was carried by the service sector, with domestic consumers and tourists out in force boosting retail sales and demand for hotels and restaurants, while media related activities, such as film and TV production, were also particularly strong. In contrast, business and financial services grew slightly less compared to the first half of the year, which may be cause for concern given their overall weight in the economy.
“Performance of the manufacturing sector was disappointing, with companies failing, or unable, to take sufficient advantage of the weaker pound. The construction sector also performed poorly, which could point to further potential weakness ahead for residential property. However, these are still preliminary figures so we may see material revisions next month given the current unusual economic environment.
“The better than expected performance of the UK economy in the immediate aftermath of the referendum indicates that the Bank of England should refrain from cutting rates further next week, and save the scarce ammunition it has left for potentially harder times ahead. May 2017 now looks like the earliest time to cut rates further, providing some boost to the economy after Article 50 is triggered.
“The economic picture painted by today’s figures also reflects the mixed evidence that we are receiving from clients, with some companies experiencing significant pressure due to rising import costs and uncertain investment environment, while others are benefiting from the weaker pound and the relatively buoyant consumer spending. So far our clients’ concerns have centred more on how to service demand with a potentially dwindling employee pool and a higher cost base than worries about a potential fall in orders.
“Based on these latest figures, our outlook for the UK economy is positive for this year. We expect slightly slower growth in the fourth quarter to take overall GDP growth to 2% in 2016. Next year could see growth decelerating further, however, taking GDP growth for 2017 as a whole to 1%.”
For media enquiries, please contact:
Jess Liebmann, KPMG Corporate Communications
Tel: 0207 311 3245
KPMG Press officeTel: +44 (0) 207 694 8773
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a revenue of £1.96 billion in the year ended September 2015. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 174,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.