UK economy

What’s going on?

The British economy grew 4.8% in the second quarter, according to official data out Thursday – but while the country did better than its neighbours, one national institution was not amused.

What does this mean?

Britain’s economy ended June 1% bigger than it was at the beginning of the month. That growth was greater than expected, thanks to consumers splashing the cash as many pandemic-related restrictions came to an end. Overall, the UK economy expanded 4.8% in the second quarter of 2021 compared to the first – in line with expectations, but slightly below the 5% the Bank of England had hoped for.

Still, stiff upper lip. The country’s economy is now just 2.2% smaller than in February 2020, shortly before lockdowns kicked in, and it’s expected to close that gap by the end of the year. Assuming nothing derails the recovery, that is: Britain, like much of the world, continues to contend with supply chain issues, staff shortages, and ever more coronavirus cases.

Why should I care?

For markets: Hammer and tongs.
The UK’s second-quarter growth rate still smashed past other large European economies like France, Germany, and Spain. A stronger economy typically translates to a stronger currency – which may help explain why the British pound is currently hovering at its highest level relative to the euro in 18 months. Then again, the UK’s central bank is also laying the foundations for a gradual return to higher interest rates. The prospect of higher returns similarly makes the country’s currency more attractive to international investors.

Zooming out: Britannia rules the booze cruise.
Dufry, Europe’s largest duty-free retailer, has seen some sales of liquor and tobacco double in recent days. British holidaymakers finally able to fly overseas for some late summer sun have been stocking up on alcohol and cigarettes: the UK’s exit from the European Union means they can now bring greater quantities back in without paying taxes.

For information purposes only, not intended to constitute financial advice from us. The customer should assess the risk of  potential loss carefully and individually before investing in any financial products. Dabbl Group Limited is authorised by the FCA under the reference numbers 767263 as an appointed representative of its Principal firm VIBHS Financial Ltd, which is authorised and regulated by the Financial Conduct Authority under the reference number 613381.

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