A worrying return to growth

Britain's growth seems to have taken even the Bank of England by surprise. That raises fresh problems for investors, says Merryn Somerset Webb.

We said here a few weeks ago that we thought the UK recession had been worsethan the official numbers suggested. We also said that horrible recessions tend to be followed by fabulous-looking rebounds. And that we therefore expected the recovery in the British economy to be rather better than George Osborne could have dared dream of only a few months ago. This is one of those rare occasions when we have turned out to be right quickly enough for our predictions to be of interest (we are often a good few years ahead of events).

Statistics have come out showing British manufacturing output growing at its fastest rate in two decades. Construction is doing even better. Meanwhile, corporate investment intentions are at a six-year high, the number of new houses underway is up 7%, new orders in the services sector are growing at their fastest since 1997, and the number of houses in which no one at all is working is at its lowest levels since 1996. Add it all up and the OECD think tank reckons Britain could grow at 3.5% (annualised) in the second half. That would be one percentage point more than the Bank of England predicted only last month, and looks like some of the best economic growth in the developed world.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.