The World Cup gave the UK economy an unexpected boost that increased GDP by 0.1% between October and November.
Economists polled by Reuters had forecast a 0.2% contraction for the period but the rise “is likely to increase pressure on the Bank of England to raise interest rates,” reports the Financial Times.
Cost of living payments from the government provided more household cash in November said Capital Economics’ Ruth Gregory, who called the minimal rise in GDP “undeniably encouraging”.
Director of economic statistics at the Office of National Statistics (ONS) Darren Morgan said the small economic growth came from “increases in telecommunications and computer programming”, adding: “Pubs and bars also did well as people went out to watch World Cup games.”
MoneyWeek reports that the extra spending on food and beverage services at the start of the FIFA World Cup was a “key contributor to the rise in GDP”.
The biggest contribution came from telecommunications and computer programming, consultancy and related activities which recorded 3.9% and 2.4% growth respectively.
Information and communication services provided the second largest contribution to the rise in GDP, the sector recording 1.7% growth in November on top of 0.8% in October.
The figures follow GDP contracting 0.3% in the three months to November. Queen Elizabeth’s death and the Liz Truss government provided unexpected impacts on economic activity, causing GDP to shrink. November’s surprise turnaround, with GDP rising 0.1% reduces the risk of the UK economy having entered recession.
However, chief investment officer at Nutmeg James McManus said: “While November has delivered marginally better GDP figures than some expected, the broader picture suggests that this is a recession in all but name.”
McManus said the economic conditions – inflation fuelled by Russia’s invasion of Ukraine, surging fuel prices and rising interest rates – and a “slowing economy” will make it “difficult for individuals and businesses to thrive over the coming months.”
He added: “A small glimmer of hope lies in the fact that a recession has been expected for a while, and the ongoing warnings of an impending downtown have enabled some businesses and households to prepare. For example, in December the Office for National Statistics said people hadn’t been raiding their savings as much as expected to cope with higher inflation, and that was possibly because they were anticipating tougher times ahead.”
Independent think-tank, the Resolution Foundation said that while the UK has likely avoided a 2022 recession, “the risk of recession still looms large”. Their research director James Smith tweeted that “both @bankofengland and @OBR_UK are forecasting the economy to contract through much of 2023 – so we’re still likely to fall into recession.”
