The Monday note - 30 October 2017

• The FTSE 100 fell 18 points last week to close at 7,505.0 on Friday, as better than expected GDP figures increased the likelihood of a UK rate rise. The ten year Gilt yield stood at 1.35%. 
• UK GDP in Q3 grew by 0.4%, which was up on Q2’s figure of 0.3% and ahead of forecasts. A strong quarter for manufacturing industries helped offset a fall in output for the construction sector. 
• A weekend press report suggested that the number of jobs UBS might move out of London after Brexit could be as low as 250. The Swiss bank had previously warned up to 1,000 jobs might be relocated. 
• Amazon reported a 34% rise in quarterly sales, beating Wall Street forecasts. Also, Apple said that the number of pre-orders for its iPhone X were “off the charts”. 

Chief Economist comments: 

The UK base rate was only cut last year to 0.25% to support the economy in the aftermath of the vote to leave the EU. Yet, with GDP growth strengthening in Q3, the much feared Brexit recession is looking very unlikely.

Nevertheless, 0.4% GDP growth is only ‘good’ in the sense that we had feared that the output figures would be worse. The economy can certainly take one rate hike, but I suspect after this upcoming increase there will be a long pause before any subsequent rise.