HSBC Holdings PLC (LSE:HSBA) is now expecting the UK economy to grow next year, as it lifted forecasts on signs of resilience to high inflation and interest rates.
The Asia-focused now expects UK GDP to increase by 0.4% in 2024, after previously forecasting a contraction of 0.6%.
It also said the UK housing market is likely to perform better next year than it previously expected, with house prices predicted to fall around 4.7%, compared with a previous forecast of a 5.7% fall.
The lender said that GDP growth forecasts had improved “for most of our major markets during the third quarter, following better-than-expected growth in the first half of 2023”.
“In North America and Europe, economic growth has proved more resilient to higher inflation and interest rates than was previously expected.
“Consumption spending in particular has continued to grow despite the squeeze on real disposable income, while employment demand has also remained strong.”
Last week, Lloyds Banking Group PLC (LSE:LLOY) also nudged its growth forecasts for next year higher although it expects inflation to fall more slowly.
The FTSE 100-listed bank thinks GDP will now strengthen by 0.4% in 2023 against its previous forecast of 0.2% and believes interest rates have peaked at 5.25%.
But it forecasts more pain in the housing market with a peak-to-trough fall in house prices of 11%, and a 5% drop this year, while it thinks inflation will still be around 4% towards the end of next year.