The UK could well already be in recession, fresh figures from the Office For National Statistics (ONS) show, despite an unexpected bounce in retail sales in November.
According to the ONS, retail sales rose by 0.1% annually in November, following a 2.5% drop a month earlier. The November read was better than feared, with markets expecting a 1.3% decline, according to FXStreet-cited consensus.
From November to October, retail sales jumped by 1.3%, after being unchanged month-on-month in October. October’s figure was revised from a 0.3% fall in October. Markets were expecting a 0.4% increase in November.
Excluding fuel, sales jumped 1.3% month-on-month in November, picking up from a 0.2% increase in October. Annually, non-fuel sales rose by 0.3% after falling by 2.1% a month earlier.
But the body also reports revised UK gross domestic prodcut (GDP) figures, and the news is not good. In the third quarter of 2023 (July to September) the ONS registered a 0.1% fall in GDP quarter-on-quarter. It had previously estimated growth was stagnant.
In the second quarter of the year, the economy witnessed no growth from the first quarter, revised down from a 0.2% expansion, the ONS added.
On an annual basis, however, GDP did grow 0.3% in the third quarter, coming in below previous forecasts of 0.6%.
The news means the UK could now be in a technical recession, defined as two consecutive periods of negative economic growth, though there is not yet precise data to verify this.
Yesterday, amid continual pressure to re-establish Britain as a growth player on the world stage, chancellor Jeremy Hunt signed a financial services deal with Switzerland aimed at easing UK firms’ access to the Swiss market and vice versa.
The post-Brexit deal, based on mutual recognition of domestic laws and regulations, was signed by Hunt and his Swiss counterpart Karin Keller-Sutter in Bern.
“It cements open access for financial services between our two nations for decades to come, helping us grow the economy and serving as a blueprint for future agreements with other key trading partners,” Hunt said.
When Britain left the EU it risked losing the benefits of its former trading arrangements with Switzerland, which were based on Brussels’ rules despite it not being a member state.
The new deal will mean frictionless, cross-border provision of financial services between the UK and Switzerland across areas such as asset management, banking and investment services.
“The UK-Switzerland Mutual Recognition Agreement is a landmark agreement,” UK Finance chief executive David Postings said.
“Given it’s been drafted specifically for the financial services sector, the market access provisions and measures aimed at removing regulatory barriers go much further than those normally included in trade deals.
“The innovative agreement sets an ambitious precedent and we hope it will serve as the new standard for future deals with other financial centres around the world.”
For certain sectors it means that a firm based in the UK will be able to serve clients in Switzerland while largely following UK rules, and vice versa.
The Treasury said the deal will also mean that the UK will be exempt from a 2024 requirement for foreign insurance firms to establish a base in the country before serving Swiss clients.
By David Huges, Sophie Wingate, and Sophie Rose, compiled by Morningstar
