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Summary
- The UK economy grew by 1.3 per cent for period October to December last year, according to official data.
- The production output dropped by 8.6 per cent for 2020, while services output declined by 8.9 per cent
- UK’s current account deficit totalled £26.3 billion for Q4 last year.
The British gross domestic product rose by 1.3 per cent for Q4 2020 as compared to the previous quarter, the latest data from the Office for National Statistics stated. A recent Reuters’ poll of economists had predicted that the economy would grow a bit slower at the rate of 1 per cent for the three-month period.
Despite the growth in the last quarter of the year, the British economy overall shrank by 7.3 per cent in inflation adjusted terms as compared to the data before the pandemic outbreak.
Taking the last year in account, the national output dropped by 9.8 per cent as compared to 2019. The production output dropped by 8.6 per cent for 2020; services output declined by 8.9 per cent while the construction output shrank by 12.5 per cent for the year in comparison to the 2019 levels.
The output for all three sectors rose in Q4 FY2020 as compared to the previous three-month period: Services: 0.6 per cent, Production: 1.8 per cent and Construction: 4.6 per cent. However, it was still below the Q4 2019 levels for each of these sectors: Services: 7.3 per cent below Q4 2019 level, Production: 4.2 per cent lower and Construction: 2.8 per cent below.
A major area of concern of the investors is the national current account deficit (CAD), which increased to £26.3 billion for Q4 last year, almost double the CAD figure for the earlier quarter. The main reason for this was a spurt in imports before the start of a new trade relationship between the UK and the European Union on 1 January.
While the FTSE 100 index dropped marginally by 15 points to touch a value of 6757.04 at 9.00 AM today, the overall investor sentiment was neutral as the Q4 output numbers were on the expected track of gradual recovery.
Top London gainers
Let us look at the top five FTSE 100 gainers on Wednesday following the news of the fourth quarter economic growth numbers came in.
Shares of Hikma Pharmaceuticals Plc (LON: HIK) jumped 3.55 per cent to GBX 2278.00 at 9.06 AM, taking the company’s market capitalisation to £5.07 billion.
The share price of BT Group Plc (LON: BT.A) jumped 1.63 per cent at 9.17 AM on Wednesday to GBX 156.20, taking the company’s market cap to a value of £15.24 billion. The telecom major’s stock delivered a YTD return of 18.15 per cent at the time of reporting.
The third largest gainer was Admiral Group Plc (LON:ADM) whose shares were up 1.38 per cent at 9.23 AM today to GBX 3081.00 (market cap £9.03 billion). The earnings per share of the Spanish insurance group’s stock were recorded to be 1.48 per cent at the time of reporting.
The next largest gainer was SSE Plc (LON:SSE), whose share price jumped 1.19 per cent to GBX 1451.50 at 9.26 AM on 31 March, taking the stock’s market cap to £14.96 billion. The stock of Perth headquartered energy company displayed a one-year return of 14.87 per cent at the time of reporting.
Another prominent gainer was Pearson Plc (LON:PSON), whose shares rose by 0.93 per cent to GBX 782.20 at 9.34 AM today on the London Stock Exchange. The stock’s market cap was valued at £5.84 billion with a one-year return of 39.41 per cent at the time of reporting.
