Introduction: 'A good chance' as Britain falls into a tech recession
good morning. Welcome to our regular coverage of business, financial markets and the global economy.
We predict that the UK is likely to have fallen into recession at the end of last year. EY Item Club believe.
martin beckChief Economic Advisor EY Item Club He said this morning there was a “good chance” the economy would contract slightly in the final three months of 2023.
This means that GDP will be negative for the second consecutive quarter after falling by 0.1% in the July-September period, implying a technical recession.
EY Item Club lowered its growth forecast for 2023 from 0.6% to just 0.3%.
beck He said this on Radio 4's Today programme.
We know GDP (Gross Domestic Product) contracted in the third quarter, but if you look at the high-frequency numbers for the fourth quarter, there's a good chance it contracted slightly again.
Official GDP statistics for the October-December period are scheduled to be released on February 15th.
Headlines that Britain is in recession are not good news for the government, as the Conservative Party attempts to chart a difficult path to another election victory.
However, as beck He points out that whether the economy shrinks by 0.1% or grows by 0.1%, “it doesn't make much of a difference to the people in the city.”
And looking ahead, EY Item Club We are more optimistic about the UK's future prospects, buoyed by slower inflation and the potential for interest rate cuts by the Bank of England.
beck say:
2024 should end on a happier note than 2023.
The group now expects economic growth in 2024 to be 0.9%, an upward revision from its October forecast of 0.7%. Growth is expected to reach 1.8% next year (up from the 1.7% forecast three months ago).
That's good news for Rishi Sunak and Chancellor Jeremy Hunt, who are working on the next Budget, which is likely to include tax cuts.
Click here for details:
agenda
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Its latest Red Flag Alert report has found that there were more than 47,000 businesses near collapse in the UK at the start of 2024.
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That’s a 25% jump on the 37,722 recorded at the end of Q3 2023, and the second quarter in a row in which critical financial distress grew by about a quarter.
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Critical financial distress grew rapidly in the last quarter in the Construction (+32.6%), Health & Education (+41.3%), Real Estate & Property Services (+24.7%) and Support Services (+23.6%) sectors.
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Begbies Traynor adds that “serious concerns” are growing about the construction and real estate sectors which still represent nearly 30% of all businesses in critical financial distress.
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Julie Palmer, partner at Begbies Traynor, says the ‘perfect storm’ of high interest rates, rampant inflation, weak consumer confidence and rising and unpredictable input costs are hitting every corner of the economy.
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Palmer adds:
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Now that the era of cheap money is firmly a thing of the past, hundreds of thousands of businesses in the UK, who loaded up on affordable debt during those halcyon days, are now coming to terms with the added burden this will have on their finances.
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“For some, a better-than-expected Christmas may kick these concerns down the road for a little longer, but the rapid growth in the levels of critical financial distress point to an economy that is waking up to the danger of debt ladened businesses in a higher rates environment.
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Recession fears haven’t prevented top hedge funds from recording bumper profits last year.
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New data shows the world’s most successful hedge funds made their biggest profits on record last year.
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Punchy bets on stock markets paid off when share prices surged at the end of 2023, when markets were lifted by hopes of interest rate cuts.
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The Financial Times reports:
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The top 20 managers made profits for investors of $67bn in 2023 according to research by LCH Investments — up from the previous record of $65bn in 2021.
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This performance cemented their dominance over the rest of the industry — the 20 hedge funds which have performed best since their inception manage 19 per cent of assets but they made around a third of annual profits last year, in dollar terms.
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The world's most successful hedge funds made a record $67bn for investors in 2023 after their bets on stocks paid off and equities enjoyed what one analyst called a 'fantastic run' https://t.co/44Fay496H9 pic.twitter.com/6hTyOdMEh4
— Financial Times (@FT) January 22, 2024
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Billionaire money managers Chris Hohn and Ken Griffin led hedge funds to deliver one of the best years for clients in 2023, points out Bloomberg.
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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
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Britain may well have slipped into recession at the end of last year, forecasters at the EY ITEM Club believe.
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Martin Beck, chief economic advisor to the EY ITEM Club said this morning “there’s a good chance” the economy may have shrunk slightly in the final three months of 2023.
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That would mean two negative quarters in a row – after the 0.1% fall in GDP in July-September – meaning a technical recession.
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EY ITEM Club have slashed their forecasts for growth in 2023 to just 0.3%, down from 0.6%.
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Beck told Radio 4’s Today Programme:
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We know that GDP – gross domestic product – shrunk in the third quarter and looking at the high frequency numbers for Q4, there’s a good chance that it may have shrunk slightly again.
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The official GDP data for the October-December quarter are due on 15 February.
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Headlines declaring the UK in recession would not be good news for the government, as the Conservatives try to plot a tricky path to another election win.
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But, as Beck points out, “it doesn’t make a massive amount of difference to the person on the street” if the economy shrank by 0.1% or grew by 0.1%.
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And looking ahead, EY ITEM Club are more optimistic about the UK’s future prospects, helped by slowing inflation and likely interest rate cuts by the Bank of England.
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Beck says:
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We should end 2024 on a happier note than 2023.
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The group now expects the economy to grow by 0.9% in 2024, up from the 0.7% growth projected in October. And next year, growth is seen hitting 1.8% (up from 1.7% forecast three months ago).
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That’s better news for Rishi Sunak, and chancellor Jeremy Hunt, who is working on his next budget statement which is likely to include tax cuts.
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More here:
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The agenda
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9.30am GMT: Average hours worked and economic growth data from the ONS
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3pm GMT: Conference Board Leading Economic Index measure of the US business cycle
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important events
25% increase in UK companies in serious financial distress
Accountancy firm Begbies Traynor reported a sharp rise in the number of companies in “significant” financial distress in the final quarter of last year.
More than 47,000 businesses in the UK were on the brink of collapse at the start of 2024, the latest Red Flag Alert report found.
This is a 25% increase compared to the 37,722 cases recorded at the end of the third quarter of 2023, and marks the second consecutive quarter in which severe economic hardship has increased by about a quarter.
Severe financial distress increased sharply in the construction (+32.6%), health and education (+41.3%), real estate and real estate services (+24.7%), and support services (+23.6%) sectors in the last quarter. did.
begbees trainer It added there were “serious concerns” about the construction and real estate sector, where nearly 30% of all companies remain in severe financial distress.
julie palmer Of partners veg beads trainersays a “perfect storm” of high interest rates, rampant inflation, weak consumer confidence and unpredictable rises in input costs is hitting every corner of the economy.
palmer addition:
With the days of cheap money now firmly in the past, hundreds of thousands of UK businesses who accumulated affordable debt in halcyon days are now beginning to accept the added strain this will place on their finances. .
“For some, a better-than-expected Christmas may keep these concerns for a little longer, but the rapid increase in the level of severe economic distress means that the economy is struggling with indebted businesses. “Higher rates of the environment show that we are waking up to the dangers.”
Largest hedge funds achieve record profits as stock prices soar
Despite fears of an economic recession, top hedge funds failed to record significant gains last year.
The world's most successful hedge funds posted their biggest profits on record last year, new data reveals.
The bold bet on the stock market paid off, with stock prices soaring at the end of 2023 as expectations for interest rate cuts excited the market.
of finance times Report:
According to research by LCH Investments, the top 20 asset managers will generate $67 billion in profits for investors in 2023, surpassing the previous record of $65 billion in 2021.
This performance solidifies the company's advantage over the rest of the industry. The 20 best-performing hedge funds since their founding, which manage 19 percent of assets, earned about a third of their annual profits in dollar terms last year.
The world's most successful hedge fund is set to deliver a record $67 billion in profits to investors in 2023 after its bets on stocks paid off and the stock enjoyed what one analyst called an “amazing rally.” Brought https://t.co/44Fay496H9 pic.twitter.com/6hTyOdMEh4
— Financial Times (@FT) January 22, 2024
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Billionaire money managers Chris Horn and Ken Griffin led their hedge fund in a bid to make 2023 one of the best years for their clients. Bloomberg points out.
It added that today's forecasts suggest that the UK's period of economic stagnation is gradually coming to an end. highwel ball, EY British chair.
ball say:
Households and businesses still face a challenging outlook in 2024, in part due to delayed interest rate rises, but slower inflation and expected bank rate cuts should help boost economic momentum as the year progresses right.
Capital investment, which has been disappointing for a while, is expected to recover in the medium term. ball addition:
A modest contraction is expected in 2024, but capital investment should pick up in the years following. Falling inflation and falling market interest rates, combined with the possibility of further tax cuts in the Chancellor's Spring Budget, suggest that the UK is at a tipping point in 2024 and about to enter a more positive growth phase. ”
Introduction: 'A good chance' as Britain falls into a tech recession
good morning. Welcome to our regular coverage of business, financial markets and the global economy.
We predict that the UK is likely to have fallen into recession at the end of last year. EY Item Club believe.
martin beckChief Economic Advisor EY Item Club He said this morning there was a “good chance” the economy would contract slightly in the final three months of 2023.
This means that GDP will be negative for the second consecutive quarter after falling by 0.1% in the July-September period, implying a technical recession.
EY Item Club lowered its growth forecast for 2023 from 0.6% to just 0.3%.
beck He said this on Radio 4's Today programme.
We know GDP (Gross Domestic Product) contracted in the third quarter, but if you look at the high-frequency numbers for the fourth quarter, there's a good chance it contracted slightly again.
Official GDP statistics for the October-December period are scheduled to be released on February 15th.
Headlines that Britain is in recession are not good news for the government, as the Conservative Party attempts to chart a difficult path to another election victory.
However, as beck He points out that whether the economy shrinks by 0.1% or grows by 0.1%, “it doesn't make much of a difference to the people in the city.”
And looking ahead, EY Item Club We are more optimistic about the UK's future prospects, buoyed by slower inflation and the potential for interest rate cuts by the Bank of England.
beck say:
2024 should end on a happier note than 2023.
The group now expects economic growth in 2024 to be 0.9%, an upward revision from its October forecast of 0.7%. Growth is expected to reach 1.8% next year (up from the 1.7% forecast three months ago).
That's good news for Rishi Sunak and Chancellor Jeremy Hunt, who are working on the next Budget, which is likely to include tax cuts.
Click here for details:
