UK GDP Preview: Forecasts from six major banks, likely entry into recession in Q3

The UK growth numbers are slated for release on Friday, November 11 at 07:00 GMT as we get closer to the release time, here are forecasts from economists and researchers of six major banks regarding the upcoming Gross Domestic Product (GDP) data.

The British economy is set to contract by 0.5% inter-quarter in the three months to September. On an annualized basis, the GDP is likely to have risen by 2.1% in Q3, down by more than double from the 4.4% reported in the previous quarter. The September month GDP is expected to fall by 0.5% vs. -0.3% booked in August. 

Danske Bank

“We expect UK GDP growth for Q3 will be in negative territory (-0.3% QoQ), marking an official start of the recession.”

TDS

“The cost-of-living crisis coupled with the Queen's passing likely weighed sharply on UK GDP in September. We think the services sector will be the hardest hit and forecast a 0.5% fall in output in the sector. Overall, we think this will leave Q3 GDP growth in line with the BoE's forecast of -0.5% QoQ, and moreover, expect this to mark the beginning of a UK recession.”

SocGen

“The GDP data for September will be biased downwards by the disruption to activity from the Queen’s funeral, leading to output falling by 0.4% MoM. The result for 3Q as a whole should be a fall in GDP of 0.5% QoQ which should signal the start of a recession that is likely to extend to the middle of next year.”

ING

“We forecast a 0.5% QoQ contraction, which should all but endorse the BoE’s more cautious approach.”

Citibank

“We expect UK Q3 GDP to print at -0.7% QoQ, below the Bank’s estimates of -0.5%. The primary driver is a sharper fall in output in September (-0.9% MoM) owing to a large Bank Holiday impact. Implication is growth in Q4 may be a little stronger than MPC expects (we expect a fall of -0.2% QoQ).”

Wells Fargo

“Consensus forecasts believe the UK economy contracted 0.4% QoQ in Q3. As far as our forecast, we are a bit more pessimistic and believe the UK economy declined 0.5% QoQ. In our view, the UK recession has started, and we agree with the Bank of England's outlook that the economic downturn will last for an extended period of time. With an economic outlook that is quite dire, we also believe BoE policymakers will probably not deliver on the amount of tightening currently priced by markets. In that sense, as markets adjust to a more gradual pace of tightening, depreciation pressures on the pound are likely to persist going forward.”