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Vicky Pryce: business correspondent on the UK GDP going up by 0.4 percent · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
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  Speaker 1: Right now, let's go to Vicky Price, our business correspondent. Vicky,
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  Speaker 1: nice to have you. UK GDP doing better. You're up, what,
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  Speaker 1: 0.4 in July?
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  Speaker 2: Yes, that was quite a surprise. Most economists expected there
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  Speaker 2: would be absolutely no increase in GDP at all in
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  Speaker 2: the month. But what nobody had anticipated was that, in fact,
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  Speaker 2: there are some sectors that are doing better than forecast.
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  Speaker 2: And suddenly they've sort of sprung into life. And a
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  Speaker 2: lot of them have to do, I'm afraid, with AI.
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  Speaker 2: Quite a lot of investment going on in data centres.
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  Speaker 2: And then you've also had general scientific research. research activities
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  Speaker 2: going on, all linked, if you like, to the technological
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  Speaker 2: developments that are happening all around us. So that seemed
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  Speaker 2: to have kept things going. And then one other factor,
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  Speaker 2: which has been, of course, the World Cup, but not
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  Speaker 2: so much in terms of people spending in pubs and restaurants,
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  Speaker 2: although there was a certain amount of that, but nothing
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  Speaker 2: like as much as expected, but more all the media
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  Speaker 2: around it. So a lot of advertising that, of course,
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  Speaker 2: was going on, people watching on television and And that
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  Speaker 2: has also boosted that sector quite significantly. So that's where
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  Speaker 2: we are. A bit of a surprise. And of course,
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  Speaker 2: it means quite a lot in terms of what the
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  Speaker 2: Bank of England may decide to do when they meet
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  Speaker 2: this week on interest rates, because faster growth may make
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  Speaker 2: them think, well, perhaps we need to raise rates, although
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  Speaker 2: the market generally does not expect them to do so.
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  Speaker 1: But they are expecting more this year, right? So does
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  Speaker 1: it bring the potential for that to come forward a
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  Speaker 1: little bit if you've got oil prices going up and
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  Speaker 1: you've got growth looking relatively better than you thought?
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  Speaker 2: Yes, I think the likelihood of increases in interest rates
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  Speaker 2: have now gone up. So the market is pricing possibly
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  Speaker 2: increases by the end of the year and a few
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  Speaker 2: in 2027, I'm afraid, if things continue as they are,
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  Speaker 2: because there's no doubt that inflation is increasing. I mean,
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  Speaker 2: we've seen what's going on in other parts of the world.
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  Speaker 2: The ones very close to us, of course, the European
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  Speaker 2: Central Bank did raise inflation. interest rate just last week
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  Speaker 2: and they did make it very clear that they expected
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  Speaker 2: inflation to be continuing its way up and that they're
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  Speaker 2: going to be thinking each time you know what is
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  Speaker 2: happening data dependent as they said in terms of their
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  Speaker 2: decisions um but they are still quite low so at
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  Speaker 2: 2.50 um percent the ecb is more than one percent
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  Speaker 2: below us we are at 3.75 and then of course
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  Speaker 2: you've got The Fed in the U.S. making a decision
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  Speaker 2: this coming week, so in the next few days. So
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  Speaker 2: it's all happening at the same time. Whether the Bank
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  Speaker 2: of England will be able to resist raising rates will
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  Speaker 2: be very interesting to see.
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  Speaker 1: Certainly will be. Vicky Price, business. Good to have you
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  Speaker 1: on as always for a Monday morning.