Britain’s economy enjoyed a stronger end to the year than the US and the eurozone in the latest sign that it will shrug off recession fears and bounce back in 2024.
Purchasing managers’ index (PMI) figures showed the private sector outpaced America’s in December while European firms remained mired in a downturn.
It added to evidence that firms and consumers feel more confident amid hopes that interest rates will start to fall in the spring – and came as US investment banking giant Goldman Sachs raised its forecast for UK GDP.
The service industries include the retail sector, the financial sector, the public sector, business administration, leisure and cultural activities.
Britain’s composite PMI reading of 52.1 for December, where the 50-mark separates growth from contraction, was the strongest since May, up from 50.7 in November. Gabriella Dickens, an economist at Pantheon, said: ‘The further rebound suggests a recession should be narrowly avoided.’
The eurozone posted 47.6, while the US just about managed growth, with a reading of 50.9.
Adding to Europe’s pain was a big rebound in inflation to 3.8pc in Germany, up from 2.3pc in November. In France it climbed from 3.9pc to 4.1pc.
In Britain, inflation is 3.9pc but on its way down, with Deutsche Bank predicting it will hit its 2pc target this spring. Markets now think, with price pressures easing, the Bank of England will start cutting interest rates in May.
Yesterday, the Bank suggested households and businesses are feeling more confident as it reported an increase in mortgage approvals to 50,100 in November, the highest since June, while consumer credit rose to £2bn, the highest level since March 2017.
US investment bank Goldman Sachs raised its forecast for UK GDP from 0.5pc to 0.6pc.
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