Economic deep dive: Q4 2023

Quarterly highlights:

The UK economy struggled for momentum in the fourth quarter

GDP rose by 0.3% m/m in November. Nevertheless, the broader trend has been one of stagnation, with GDP down 0.2% in the three months to November compared with the three months to August.

Inflation eased further but interest rates will remain higher for longer

Headline inflation fell from 6.7% to 4.0% over Q4, as food and energy price pressures eased. The Bank of England is still concerned by the stickiness of inflation, so rates will likely remain restrictive.

Pay growth began to ease as labour demand cooled

Vacancies continued to fall in Q4, which helped contribute to a slowdown private sector pay growth (from 8.1% in August, to 6.5% in November).