London pre-open: Stocks seen up; UK falls into recession

London stocks were set for a firmer open on Thursday following gains in the US and Asia, as data showed the UK fell into recession at the end of 2023.

The FTSE 100 was called to open around 30 points higher.

Provisional figures released earlier by the Office for National Statistics showed the UK fell into recession at the end of last year, after a bigger-than-expected contraction in GDP in the fourth quarter.

GDP contracted by 0.3% in the three months, following a 0.1% decline in the third. A recession is defined as two consecutive quarters of negative growth.

Analysts had been expecting another quarter of no growth, although most had been looking for a smaller contraction, of 0.1%.

Over the entirety of 2023, however, the ONS said GDP edged up by 0.1% year-on-year.

During the fourth quarter, there were falls in all three main sectors. Construction output slid 1.3%, production by 1% and services by 0.2%.

On a monthly basis, GDP fell by 0.1% in December, compared to growth of 0.2% in November - revised down from an 0.3% improvement - and a 0.5% fall in October, which was revised down from a 0.3% fall.

Thursday’s GDP data will be a blow to the government, which just over a year ago promised to grow the economy as one of Rishi Sunak’s five pledges.

At the time, Downing Street said the pledge would be met if the economy was bigger the in fourth quarter of 2023 than it was in the third.

In corporate news, British Gas owner Centrica posted a fall in annual profits on the back of "sharply lower" commodity prices.

Adjusted operating profit for the year to December 2023 came in at £2.72bn from £3.3bn. The full-year dividend was up 33% to 4p a share.

"As you would expect, sharply lower commodity prices and reduced volatility will naturally lower earnings in comparison to 2023 as we return to a more normalised environment," said chief executive Chris O’Shea.

Business information and analytics firm Relx reported robust growth in 2023, with revenue rising an underlying 8% to £9.16bn, alongside an adjusted operating profit of £3.03bn, reflecting a 13% increase.

Adjusted earnings per share rose 11% on a constant currency basis to 114p. Looking at 2024, Relx anticipated sustained positive momentum with expectations for strong underlying growth in revenue and adjusted operating profit, as well as significant growth in adjusted earnings per share.