LONDON — The U.K. has thus far avoided a widely anticipated recession, and the signs from the business world are that the economy may be holding up better than feared, according to veteran Schroders fund manager Andy Brough.
Figures published earlier this month showed that the U.K. GDP contracted by 0.5% in December, as the economy flatlined over the final quarter of 2022 to narrowly avoid a technical recession.
The Bank of England projects that the British economy has entered a shallow recession in the first quarter of 2023 that will last for five quarters, however, as energy prices remain high, and rising market interest rates restrict spending.
But Brough, head of the pan-European small and mid-cap team at British asset manager Schroders, said that his interactions with businesses suggested greater resilience than the weak GDP figures and official forecasts imply.
«The consumer's still out there spending. Every number is a surprise to the market, isn't it? I walk up and down the streets or cycle into work, [and] there's still lots of people out there, and people are still buying houses, still buying cars, they're still shopping,» he told CNBC's «Squawk Box Europe» on Wednesday.
«There's seven wonders of the world, and the eighth wonder of the world is how GDP is calculated,» he said, adding that he was «surprised» by the scale of the December contraction.
In their latest earnings reports, British banks mostly increased their loan loss provisions — money set aside to insure against customers defaulting on their debts.
Brough advised the market against reading this as a sign that tightening financial conditions are heightening default risks among U.K. consumers, and said that companies he is speaking to are actually
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