What's going on?

It�s not you, UK, it�s� okay, it is you: data out on Friday showed the country�s economy grew by a worse-than-expected 2.1% in August.

What does this mean?

Economists were, on average, predicting the UK would grow 4.6% in August compared to July. If only: its manufacturing industry � which contributes 17% of the economy � grew by just under 1% versus an expected 3%, construction � contributing 7% � grew 3% rather than 5%, and services � contributing over 70% � grew 2.4% compared to the forecasted 5%.


The latter will be tough to swallow: the UK government just spent $675 million enticing diners back into restaurants � which, as a key part of the hospitality and leisure industry, is a key part of the services industry � but it doesn�t look like it�s helped growth much at all.

Why should I care?

For markets: From worse to worser.

Economic growth data isn�t especially useful to investors given how outdated the statistics are when they�re released, but a slowdown in growth since June�s initial bounceback might worry those with UK assets. And considering things in the UK have only gotten worse � see spiking coronavirus cases and the ever-present Brexit threat � its companies� earnings may soon follow. That might leave investors lured in by a seemingly attractive British stock market valuation with stocks they can�t profit from, or hoping for a recovery that never comes.

The bigger picture: So much negativity.

Some economists now expect the Bank of England to step up its economic support before the year�s out. One way it can do that is by cutting the country�s key interest rate below 0%, which would theoretically discourage saving and encourage borrowing and spending. As for whether Brits would then have to pay rather than receive interest on their savings, that�s unlikely. Switzerland, for example, has negative rates, and only the ultra-rich have had to pay a penny.