Fintech platform TPP has urged investors not to overreact to headlines around a recession in the UK.
GDP growth fell by 0.1% in Q4 2023, following a similar dip of 0.1% in Q3 – two months of drops in a row means the UK is in a ‘technical recession’.
But Lane Clark, co-founder of TPP, said: “We want to caution our investors not to overreact to recession noise without examining the full economic context.
“Minor fluctuations in GDP do not necessarily indicate disaster. The UK employment rate actually improved in Q4, defying expectations of a rise in unemployment.
“Average earnings growth also remains robust at 5.8%, outpacing inflation.”
Ed Davies, TPP co-founder, added: “There is no official recession criteria based on GDP.
“The so-called ‘technical recession’ definition of two quarters of contraction is a rule of thumb lacking rigorous economic analysis.
“It does not account for the depth and duration of declines or offsetting metrics like strong consumer spending and wages.”
“The US experienced GDP contraction in the first two quarters of 2022, but resilient retail sales, hiring, and wage growth led economists to determine no recession occurred.
“We need to look at the full picture including lagging indicators like unemployment before declaring a recession.
“Rather than getting caught up in potentially misleading headlines, we encourage our investors to focus on long-term portfolio resilience.”
