UK GDP up 0.4% last quarter, its slowest pace since 2005. GDP was up 2.5% year-over-year, however, and met consensus. Anemic growth is prompting speculation about more rate cuts from the Bank of England, which has already cut rates by 75 basis points since their peak at 5.75% in July. Bloomberg:
Financial services expanded at the slowest pace in five years as Royal Bank of Scotland Group Plc and HSBC Holdings Plc led writedowns among U.K. banks and added to global losses of almost $309 billion. With the worst housing slowdown since 1992 adding to recession risks, the Bank of England has cut interest rates three times and tried to ease strains in the mortgage market.
“We expect the economy to slow, and that will dominate the outlook for inflation and lead to further cuts in interest rates in due course,” Nick Bate, an economist at Merrill Lynch & Co. who used to work at the U.K. Treasury, said in an interview on Bloomberg Television. “We’re not looking for a recession. You can’t rule it out.”
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