At the end of the momentous week that saw the Brexit process finally triggered by prime minister Theresa May, the final reading for UK fourth-quarter 2016 economic growth, to be revealed on Friday, will draw a line under the year the shock vote was taken.
Howard Archer, chief UK and European economist for IHS Markit thinks there will be some changes to the UK GDP growth rates as the data are being revised for 2015 and 2016 but the overall story is likely to remain the same, with the economy holding up well through the second half of 2016 following June’s referendum.
The second reading for growth in the three months to December 2016, delivered last month, was revised up to 0.7% from an initial 0.6% reported in January, but full year GDP for 2016 was revised down to 1.8% from 2.0% on the back of weaker exports.
First-quarter 2017 GDP data due sometime in the next month is expected to be impacted by markedly weaker consumer spending, reflecting the increased squeeze on purchasing power coming from markedly higher inflation and muted pay growth.
Archer said: “Like a slow puncture, we suspect that the economy will gradually lose air as the year proceeds. Just how much the economy slows will likely depend on how much an improved export performance can compensate for slowing domestic demand.
He expects GDP growth to ease back to 1.7% in 2017, which assumes that the economy grows by no more than 0.5% quarter-on-quarter in the first and then eke out growth of around 0.2% quarter-on-quarter for the rest of the year.
House prices too ...
Meanwhile, mortgage lender Nationwide is expected to unveil its latest house price index on Friday as well, with IHS Markit forecasting a modest 0.3% month-on-month increase in March after rises of 0.6% in February and 0.2% in January.
Archer said “We believe the fundamentals for house buyers will progressively deteriorate over the coming months with consumers’ purchasing power weakening markedly and the labour market likely eventually softening.”
There will be little on the corporate front to provide much interest despite being the latest day of March, and the end of tax year just around the corner.
Among the few results scheduled, veterinary services firm CVS Group PLC (LON:CVS) should report a strong first-half, with underlying earnings (EBITDA) seen rising to around 19mln, up from £15.2mln a year earlier.
At its AGM in November, the firm reported like-for-like sales growth of 6.3%, and that number should continue to be strong, albeit against tougher comparatives.
Full-year results from life and pensions company Chesnara Plc (LON:CSN) will also be of interest, particularly following its £136mln acquisition of Legal & General Group PLC’s (LON:LGEN) Dutch life and pensions arm last year.
Significant events expected on Friday March 31:
Interims: CVS Group PLC (LON:CVS), Touchstone Innovations Plc (LON:IVO), Mobile Streams Plc (LON:MOS), Management Resources solutions PLC (LON:MRS), Pantheon Resources Plc (LON:PANR)
Finals: Chesnara Plc (LON:CSN)