It has been confirmed this morning, as had been expected, that the UK had left the shallow recession it had entered in 2023. Figures released from the ONS this morning revealed that the UK grew 0.6% in Q1 of 2024, with 0.4% of the growth coming in March alone.
Fastest growth in two years
The figure of 0.6% was higher than was expected, although most of that growth came from the services sector as well as healthcare and transport. The areas that the public rely on on a day to day basis.
These figures this morning make the UK the joint fastest growing economy in the G7 for Q1 alongside Canada. It is a rare bit of good news that may inject a bit of a feel-good factor into spending just as the summer arrives and the better weather is finally here.
Inflation is coming down but slower than all of us would have liked. It means a summer interest rate cut is more likely to happen in the autumn now, which will worry families whose mortgages are due to renew in the next few months. And that is an area which is still going to put pressure on up to a million households this year. Even with a rate cut or two this year, mortgage rates are still way higher than a few years ago, and with hundreds of thousands of mortgages due to renew this year, many of us will be paying hundreds of pounds more per month.
However, for added context, the average GDP per head is still £300 lower than when Rishi Sunak took power, meaning there is still plenty of room to go before people start to feel a tangible benefit in their pockets. Also, perversely, good news might be bad news when it comes to interest rates. If the UK economy continues a stronger-than-forecast path, it may tempt the BoE to keep higher interest rates for longer, which in turn could cause more pain for homeowners. As with most things, there is a flipside to everything.
Uncertain outlook
For the fenestration sector, I still believe the outlook is mixed. We have already seen a very high number of casualties since the start of the year, and my own conversations with key people still point to a sector that is suffering generally from lower demand.
However, there remains good opportunities in the residential aluminium sector, where higher quality products command better margins and more demand. Especially in areas such as internal doors and sliding patio door. Installers should continue to look at these product niches and make the most of the rising interest in them.
I still believe the high volume-based business model is at risk, and we have seen in the types of businesses that have gone to the wall, like Safestyle and Everest, that low-margin and high-volume models are not working well right now. Companies should continue to diversify their approach, cut costs where they can and adapt to a market that is likely to remain well under post-lockdown book levels.
To get weekly updates from DGB sent to your inbox, enter your email address in the space below to subscribe:
By subscribing you agree to DGB sending you weekly email updates with all published content on this website, as well as any major updates to the services being run on DGB. Your data is never passed on to third parties or used by external advertising companies. Your data is protected and stored on secure servers.
Good news long awaited.More money in the publics pocket is needed.
Let’s hope the Covid doesn’t make a comeback and put us back to square one.
It’s taken a long time to recover