UK economy showing ‘signs of life’ as eurozone heads towards recession

The British economy shows ‘signs of life’ – as the sclerotic eurozone heads towards recession, according to latest figures.

A closely watched index of private sector activity in the UK returned to growth in November after three months of decline.

But in the single currency bloc business continued to struggle – leaving it on the brink of recession.

The updates came as an influential ‘hawk’ at the European Central Bank said she believes further interest rate hikes can be taken off the table following the ‘remarkable’ fall in inflation.

Isabel Schnabel fuelled speculation that rates in Europe and the UK will be cut in the first half of next year.

Referring to the fall in eurozone inflation to 2.4 per cent, from above 10 per cent a year earlier, the German economist said in an interview: ‘When the facts change, I change my mind. What do you do, sir?’ – a line often attributed to John Maynard Keynes.

Schnabel added: ‘The most recent inflation number has made a further rate increase rather unlikely.’ 

S&P Global said its purchasing managers’ index of activity in the UK rose to 50.7 last month.

That was up from 48.7 in October and the first time it was above the 50 cut-off between growth and decline since July, driven by the services sector.

‘After three months of continuous contraction, the services sector began to show signs of life,’ said John Glen, chief economist at the Chartered Institute of Procurement and Supply, which compiled the report with S&P.

He added: ‘This could be another signal that this is the start of a more sustainable revival for 2024.’

By contrast, the eurozone clocked up 47.6, up from October’s near three-year low of 46.5. 

Having contracted in the third quarter of the year by 0.1 per cent, the report indicated that the eurozone economy is on course for another decline in the final quarter.

That would leave it in recession, which is defined as two quarters of contraction in a row.

Cyrus de la Rubia, chief economist at the Hamburg Commercial Bank, said the report ‘does not leave much room for optimism regarding a swift recovery in the immediate future’. He added: ‘A fall in GDP is on the cards for the fourth quarter.’

Soames to lead embattled CBI 

To the rescue: Rupert Soames

The crisis-hit Confederation of British Industry (CBI) has turned to Sir Winston Churchill’s grandson to save it from oblivion.

Rupert Soames, who led a turnaround at Serco, will be the president, joining months after it was plunged into crisis over a sexual misconduct scandal. He replaces Brian McBride. 

In April, director general Tony Danker was fired, after allegations that staff felt his behaviour had at times been inappropriate.

Later, allegations emerged of rape and sexual harassment against other, unnamed former staff.