{"id":4708,"date":"2024-02-15T13:49:08","date_gmt":"2024-02-15T13:49:08","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=4708"},"modified":"2025-03-27T15:50:43","modified_gmt":"2025-03-27T15:50:43","slug":"uk-money-trends-still-suggesting-downside-risk","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=4708","title":{"rendered":"UK money trends still suggesting downside risk"},"content":{"rendered":"<p>UK real money contraction warned of 2022 economic stagnation and 2023 recession. Weakness has abated but real money measures have yet to resume expansion, casting doubt on hopes of a sustainable economic recovery.<\/p>\n<p>The latest ONS numbers are consistent with a recession having started in Q2 2023. Among key features of the GDP release:<\/p>\n<ul>\n<li>\n<p>Gross value added (GVA) at basic prices peaked in Q1 2023, falling by 0.03% in Q2, 0.16% in Q3 and 0.34% in Q4.<\/p>\n<\/li>\n<li>\n<p>The cumulative decline in GVA \/ GDP of 0.5% between Q2 and Q4 is inconsistent with a description of the economy as &ldquo;flatlining&rdquo;.<\/p>\n<\/li>\n<li>\n<p>Similarly, claims that the consumer has been holding up are no longer tenable given a 1.0% cumulative contraction in household consumption between Q2 and Q4.<\/p>\n<\/li>\n<li>\n<p>GDP \/ GVA fell by 0.2% and 0.3% respectively in the year to Q4, meeting a stronger recession definition than the two-quarter rule (in contrast to Japanese GDP also released today).<\/p>\n<\/li>\n<li>\n<p>Nominal as well as real GDP fell in Q4, with the GDP deflator rising at a 2.0% annualised pace between Q2 and Q4.<\/p>\n<\/li>\n<\/ul>\n<p>The suggestion of cyclical peak in Q1 2023 is supported by the LFS employment measure, which reached a high in the three-month period centred on March. (The LFS aggregate is 10% larger than the PAYE employment series, reflecting coverage of self-employment.) Aggregate hours worked also peaked then, falling 1.5% through November.<\/p>\n<p>Real money measures began to contract in H2 2021. GDP stagnated from Q2 2022, consistent with the usual lag. The six-month rates of decline of real narrow and broad money reached a peak in March 2023, warning of H2 economic contraction &ndash; see chart 1.<\/p>\n<p><strong>Chart 1<\/strong><\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"https:\/\/newstar.squarespace.com\/storage\/150224c1x.png?__SQUARESPACE_CACHEVERSION=1708001446558\" alt=\"\" \/><\/span><\/span><\/p>\n<p>Six-month real money momentum has recovered significantly but has yet to turn positive. Slowing inflation has been a key driver, while nominal broad money is no longer contracting. Economic weakness may abate in H1 2024 but current monetary trends appear inconsistent with a meaningful recovery. Early rate cuts are urgently required to limit still-significant downside risk and head off an extended inflation undershoot.<\/p>\n<p>&#8212;&#8211;<br \/>\nCOMMENT:<br \/>\nAUTHOR: David Cotton<br \/>\nEMAIL:<br \/>\nIP: 78.129.191.50<br \/>\nURL:<br \/>\nDATE: 02\/15\/2024 01:49:08 PM<\/p>\n<p>Indeed, until vacancies bottom out I find it hard to be particularly optimistic. For the UK and other economies.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>UK real money contraction warned of 2022 economic stagnation and 2023 recession. Weakness has abated but real money measures have yet to resume expansion, casting doubt on hopes of a sustainable economic recovery. The latest ONS numbers are consistent with a recession having started in Q2 2023. Among key features of the GDP release: Gross [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-4708","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/4708","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4708"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/4708\/revisions"}],"predecessor-version":[{"id":7017,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/4708\/revisions\/7017"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4708"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4708"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4708"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}