UK Economy Bounces Again! What did BOE Governor Bailey say?

 The UK economy bounced back from a recession with 15.5% growth in the third quarter of 2020, according to preliminary estimates published by the Office for National Statistics (ONS) today. However, the published data deviated from market expectations for 15.8% growth.

This surge marks the strongest quarterly expansion in the economy since the record began in 1955, but the country's Gross Domestic Product (GDP) is still 9.7% below the level recorded in the third quarter of 2019. Compared to the third quarter last year, GDP fell 9.6 %.

Monthly growth was seen to be still slow in the third quarter, with GDP growing by 6.3% in July, but starting to decline in August with expansion of 2.2% and 1.1% in September.

However, this recorded recovery may be lost in the fourth quarter following the re-implementation of closures nationwide following the resurgence of coronavirus cases.

Although growth in the third quarter was seen to be slower than expected, Bank of England (BOE) Governor Andrew Bailey said the reading of the published data was in line with the central bank's projections although it was still far from previous economic levels.

Bailey, speaking at the Financial Times Global Digital Conference today, also said positive news about the effectiveness of the Covid-19 vaccine has helped lift economic uncertainty.

He also hinted that there is no immediate need for negative interest rates at the moment. Bailey's statement prompted the pound to rise again in the European session after being weakened by news of Brexit which showed the two sides were still far apart on key issues.