MNI 5 Things: UK Sees Robust Q3 Growth, Questions On Longevity

By Laurie Laird, Jamie Satchi and Jai Lakhani

     LONDON (MNI) - The following are the key points from the UK Q3 GDP and

public finance data published Friday by the Office for National Statistics.

     - Strong growth in employee compensation and robust consumer spending

lifted growth in Q3 GDP to it fastest pace since Q4 2016.

     - Despite that, disposable income was flat on the quarter, denting

households' financial positions. The savings rate slipped to 3.8% from an

upwardly-revised 4.1% in Q2. However household net borrowing, including large

capital outlays, increased for the eighth straight quarter, the longest stretch

since records began in 1987.

     - The cloudier outlook for consumption goes some way to explaining the Bank

of England's reduction in its Q4 growth forecast to 0.2%. Consumer spending has

done the heavy lifting in 2018, as business investment has declined over the

past three quarters, the longest stretch in nine years.

     - The current account deficit widened by more than expected, hitting its

highest ratio as a proportion of GDP since Q3 2016. The deterioration was broad

based, but primarily driven by a fall in the investment income balance and a

decline in the trade in services surplus.

     - A surge in VAT and income taxes reduced public sector borrowing in

November to a 14-year low for the month, leaving year-to-date borrowing at its

lowest level since 2002. YTD borrowing has exceeded the OBR's full-year target,

but a generous tax haul in early 2019 could bring fiscal year borrowing back

into line by March.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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