Week ahead: Fresh GDP figures to reinforce stagnation fears

Further evidence that the UK economy is headed into reverse is likely to emerge this week when fresh GDP estimates are released on Thursday.

A damning set of forecasts released by the Bank of England last week weighed heavily on London’s top companies.

The capital’s premier FTSE 100 index fell 1.61 per cent over the course of last week to 7,387.94 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, tumbled nearly four per cent to below 20,000 points.

A reduction in consumer spending in response to the tightest cost of living grip in 30 years is likely to have dragged down output growth in March.

Most analysts expect the economy to have not budged at all, illustrating the UK is already being hit by rampant inflation that is expected to heat up over the coming year.

The Bank of England last week warned the UK is likely to tip into recession next year, resulting in the economy shrinking 0.25 per cent.

“The key thing to look out for will be household consumption and business investment in particular, which we expect will have material contributions to the quarterly print,” analysts at Deutsche Bank said.

Rate setter Michael Saunders, who voted for a 50 basis point rate hike last week, delivers tomorrow what will be a closely watched speech on the trajectory of monetary policy.

Threadneedle Street lifted borrowing costs 25 basis points last week to one per cent, their highest level in 13 years but are still low by historical standards.

On the corporate front, fund manager Brewin Dolphin posts interim results on Wednesday, the first time it has updated markets since it announced a tie up with Royal Bank of Canada earlier this year.

New US consumer confidence data is released on Friday.