Is the UK economy doing better than expected or worse? You decide!
GDP data out this morning is puzzling to say the least. It surprised on both the upside and the downside.
Disappointingly, quarterly growth was weaker than forecast. But the good news is the final month of the period — September — was in fact better than expected.
It’s a choose your own adventure economy.
For optimists, the economy is already almost back to pre-pandemic levels and showing signs of working through the supply chain issues and staffing problems that have plagued us during autumn.
For pessimists, the speed of Britain’s recovery is rapidly decelerating and September’s GDP beat was anaemic at best. The difference between 0.4% and 0.6% is vanishingly small.
All of this compounds the headaches for those reading the economic tea leaves: chiefly, the Bank of England.
You can make a case that today’s numbers support the Bank’s controversial call to leave interest rates unchanged last week. The recovery in the past few months has been stuttering and needs all the help it can get.
But the data doesn’t tell us much about when the Bank should raise rates: December or February?
Britain’s recovery is in a confusing phase where seemingly contradictory lights are flashing on the economic dashboard and meters are swinging wildly. The next MPC decision will likely once again be on a knife edge.
Pity the policy-makers. I don’t envy their job.