UK Economy Grows by 0.6% in Q2 Amid Post-Recession Recovery

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4 months ago

August 17, 2024

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The UK’s economy expanded by 0.6% between April and June, continuing its recovery from a brief recession late last year, according to data released by the Office for National Statistics (ONS). This growth, in line with forecasts, follows a 0.7% increase in the first quarter of 2024.

The services sector drove the latest economic expansion, with notable contributions from the IT industry, legal services, and scientific research. Services remain the largest sector in the UK economy, far surpassing manufacturing and construction, which both experienced declines in output during the second quarter.

Liz McKeown, director of economic statistics at the ONS, highlighted the positive trend: “The UK economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year.” The economy had entered a shallow and short-lived recession last year, defined by two consecutive quarters of shrinking economic activity.

While GDP grew over the quarter, June’s figures showed flat growth. This stagnation was partially attributed to strike action by junior doctors, which led to 61,989 cancelled NHS appointments between June 27 and July 2. Economists have warned of potential slowdowns in the latter half of 2024, partly due to high interest rates.

Anna Leach, chief economist at the Institute of Directors, noted, “Businesses are reporting modest activity for the summer months, no doubt affected by still high interest rates.” Earlier in August, the Bank of England reduced interest rates to 5% for the first time in four years.

The new government, led by Prime Minister Sir Keir Starmer, has vowed to address these economic challenges. In the King’s Speech, Starmer announced plans to ease infrastructure development and support economic growth. Chancellor Rachel Reeves acknowledged the difficulties faced, stating, “The new government is under no illusion as to the scale of the challenge we have inherited after more than a decade of low economic growth.”

Shadow Chancellor Jeremy Hunt countered, asserting that the GDP figures “are yet further proof that Labour has inherited a growing and resilient economy.” Meanwhile, the manufacturing sector showed mixed results, with some growth in June despite an overall decline during the quarter.

Construction output dipped by 0.1% between April and June, driven by a drop in new building projects, although repair and maintenance activities grew. The ONS noted that the rate of decline in construction is easing. Future prospects for the sector may improve if the Bank of England further cuts interest rates.

Recent inflation data revealed an increase to 2.2% for the year to July, exceeding the Bank of England’s 2% target. However, inflation within the services sector continued to ease. Capital Economics expects the Bank to make additional interest rate cuts later this year.

Overall, while the UK economy shows positive signs of recovery, ongoing challenges and uncertainties remain as the country navigates its post-recession landscape.

Related Topics:Business Post-Recession Recovery UK UK Economy

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Spain’s Retail Sales Slow in November Despite Strong Third-Quarter Consumer Spending

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1 day ago

December 27, 2024

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Spain’s year-on-year retail sales recorded a modest increase of 1% in November, according to data from the National Statistics Institute (INE), marking the slowest growth since June. The figure is a decline from October’s 3.4% rise and fell short of analysts’ expectations of a 2.8% increase.

Dampened November Sales

The slowdown in November was attributed to falling spending on both food and non-food items. Food spending growth decelerated to 1.5%, down from 2.2% in October, while spending on non-food products dropped sharply to 1.2%, compared to October’s 5.9% increase.

Month-on-month retail sales also declined, falling 0.6% in November after stagnating in October. Despite this dip, retail trade for the first 11 months of the year posted a 1.5% increase compared to the same period in 2023.

Robust Third-Quarter Performance

In contrast to the subdued November figures, Spain’s consumer goods spending showed strong performance in the third quarter of 2024. According to NIQ’s quarterly Retail Spending Barometer, spending on consumer goods rose 4.5% compared to Q3 2023. Durable and technological goods also saw a 4.2% uptick over the same period.

Antonio de Santos, retail vertical director at NIQ Spain, attributed the growth to price moderation in the fast-moving consumer goods (FMCG) market. “Nearly all sections of packaged and fresh products have shown positive growth in volume this year,” he stated on the company’s website. De Santos also highlighted rising household incomes, reduced mortgage expenses, and a strong employment market as key drivers of consumer spending.

Fernando Gómez, retail head of GfK Spain, noted unexpected growth in the technology and durables market during Q3, defying analysts’ predictions of a slowdown. He pointed to strong consumer interest in equipment, health, leisure, and cultural products, adding, “This indicates a promising outlook for a robust fourth quarter, barring unforeseen disruptions like the recent flooding disasters in southern Spain.”

Challenges for Retailers

While falling prices have benefited consumers, they have sparked concerns among retailers facing increased competition from Asian brands. These emerging competitors are gaining a foothold in Spain and the EU with broader product ranges at lower prices.

The rise of online shopping continues to challenge brick-and-mortar retailers, especially during the holiday season. This shift has forced traditional stores to adapt to changing consumer habits or risk losing market share.

Despite November’s softer retail sales, the overall market remains buoyed by a strong third quarter, offering a cautiously optimistic outlook for the months ahead.

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Eni Unveils €100 Million Supercomputer to Boost Energy Discovery and Decarbonisation Efforts

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2 days ago

December 26, 2024

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Italian energy company Eni has unveiled one of the world’s most powerful supercomputers, the HPC6, marking a major leap in its oil and gas discovery capabilities and its commitment to decarbonisation and clean energy solutions.

With an estimated cost exceeding €100 million, the HPC6 is equipped with nearly 14,000 graphics processing units (GPUs). This cutting-edge system will handle complex artificial intelligence (AI) functions and perform highly sophisticated calculations, enabling Eni to process vast amounts of data with unprecedented speed and accuracy.

Revolutionising Energy Discovery

The HPC6 is expected to transform how Eni identifies and evaluates oil and gas reserves. By analysing data from drilling operations, seismic surveys, and reservoir simulations, the supercomputer can pinpoint oil and gas reservoirs with greater precision, assess deposit sizes, and recommend optimal drilling strategies.

Beyond discovery, the HPC6 will support critical functions such as well positioning, production forecasting, enhanced oil recovery, and advanced reservoir simulations. These capabilities promise to significantly improve the efficiency and sustainability of Eni’s exploration and production processes.

Accelerating Clean Energy and Decarbonisation

The supercomputer also plays a crucial role in Eni’s transition toward cleaner energy and decarbonisation. By harnessing its computational power, the company has already advanced fluid dynamics and geological studies for carbon storage, optimised industrial plant operations, and developed improved batteries.

Additionally, Eni has leveraged supercomputing to enhance its biofuel supply chain, making it more efficient and environmentally sustainable. The HPC6 will further aid in refining these initiatives, cementing Eni’s position at the forefront of technological innovation in the energy sector.

A Strategic Step Forward

Eni’s investment in the HPC6 underscores its strategic focus on integrating advanced technologies into its operations. As the energy sector faces increasing pressure to balance resource demands with environmental responsibility, such innovations are critical to maintaining competitiveness and achieving long-term sustainability goals.

The deployment of the HPC6 is also expected to bolster Eni’s ability to adapt to the evolving energy landscape. From accelerating the discovery of traditional energy sources to advancing clean energy projects, the supercomputer represents a pivotal tool in navigating the challenges of a rapidly changing industry.

Eni’s CEO described the HPC6 as “a game-changer for the energy sector,” highlighting its potential to drive both economic and environmental progress. With this launch, Eni reinforces its commitment to leveraging technology to address global energy challenges while advancing its decarbonisation objectives.

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European Stock Market Shines in 2024, Driven by Green Energy, Defence, and Technology

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2 days ago

December 26, 2024

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The European stock market showcased remarkable stories of growth and resilience in 2024, as companies across sectors like green energy, defence, and technology capitalised on emerging opportunities. The year’s top-performing large-cap companies delivered stellar results, reflecting innovation and adaptability in the face of global challenges.

Top Performers of 2024

10. SAP SE
German software giant SAP SE saw a 71.56% year-to-date gain, propelled by robust growth in its cloud services. The company’s integration of generative AI and strategic acquisitions of AI startups cemented its leadership in enterprise software.

9. Leonardo S.p.A.
Italian defence firm Leonardo S.p.A. posted a 72.41% return, driven by heightened European defence spending. Record helicopter orders and growth in its cybersecurity division further boosted performance.

8. argenx SE
Belgian biotech argenx SE delivered a 76.01% return, thanks to the continued success of its autoimmune treatment, Vyvgart, alongside strong sales in major global markets and positive clinical trial outcomes for pipeline drugs.

7. NatWest Group
UK-based NatWest Group gained 82.22% as rising interest rates improved net interest margins. Cost-cutting measures and growth in mortgage lending also contributed to its strong performance.

6. Rolls-Royce Holdings
The aerospace giant achieved a 92.06% gain, benefitting from a resurgence in international travel and increased demand for wide-body aircraft engines. Operational streamlining and the reinstatement of dividends further bolstered investor confidence.

5. International Consolidated Airlines Group (IAG)
IAG, parent company of British Airways and Iberia, saw its stock rise by 94.52%, driven by surging passenger travel and improved profit margins through the adoption of fuel-efficient aircraft.

4. Rheinmetall AG
German defence contractor Rheinmetall AG posted a 115.89% gain, capitalising on increased NATO contracts and expanded ammunition production amid geopolitical conflicts.

3. UCB SA
Belgian biopharmaceutical firm UCB SA soared 140.05%, driven by FDA approval of a new neurological treatment and strong sales of immunology therapies. Promising late-stage trial results also buoyed investor sentiment.

2. Kongsberg Gruppen ASA
Norwegian defence and maritime leader Kongsberg Gruppen ASA delivered a 177.40% return, bolstered by record demand for missile systems and innovations in autonomous maritime technology.

1. Siemens Energy AG
Siemens Energy AG emerged as the year’s top performer with an extraordinary 326% gain. The company overcame wind turbine quality issues and secured record contracts in renewable energy and hydrogen projects, stabilising its financial position with government-backed guarantees.

Looking Ahead to 2025

While some top performers like Rolls-Royce and Leonardo have maintained momentum from 2023, the upcoming year brings new uncertainties. Challenges such as potential US trade tariffs under Donald Trump’s presidency, European Central Bank policy shifts, and prolonged geopolitical conflicts could reshape market dynamics.

Emerging opportunities in green energy, artificial intelligence, and defence technology are expected to define the next wave of winners. For investors, diversification and adaptability remain key strategies for navigating an evolving economic landscape.