London pre-open: Stocks seen up as investors mull GDP

(Sharecast News) - London stocks were set to gain at the open on Friday as investors mulled the latest UK GDP data.

The FTSE 100 was called to open around 20 points higher.

Figures released earlier by the Office for National Statistics showed that the economy unexpectedly shrank in January.

Gross domestic product contracted 0.1% following 0.4% growth in December, and versus expectations for 0.1% growth.

ONS director of economic statistics Liz McKeown said: "The fall in January was driven by a notable slowdown in manufacturing, with oil and gas extraction and construction also having weak months.

"However, services continued to grow in January led by a strong month for retail, especially food stores, as people ate and drank at home more."

Paul Dales, chief UK economist at Capital Economics, said: "Overall, these figures don't do much to change our forecasts that the economy will grow by just 0.1 q/q (or perhaps 0.2% q/q) in Q1 and by only 0.7% in 2025 as a whole.

"With the prospect of higher taxes from April having left business sentiment on the floor and the global backdrop deteriorating, the economy is unlikely to strengthen much from here."

In corporate news, housebuilder Berkeley Group reaffirmed earnings guidance but said there needed to be greater confidence in the path of interest rate cuts and wider economic stability to consolidate any recovery in sales.

"Enquiries are at a consistently good level, and we have seen the modest improvement in sales reservations that we noted at the time of the interim results continue through this trading period with sales rates ahead of those achieved last year," the company said in a trading statement.

Heat treatment and thermal processing services firm Bodycote delivered a cautious outlook as it presented its full-year results, with end markets remaining mixed after a "challenging" 2024, in which adjusted operating profits grew only 1.1% to �129m.

The company said the current run-rate profit performance is at similar levels to the second half, with challenging conditions in automotive and industrial markets combined with strong demand in aerospace and defence.

Vanquis Banking saw its red ink swell to �119.3m in 2024, up from �11.7m one year before. That was chiefly the result of �191.0m of impairment charges, while net interest income fell 5% to �420.0m. Risk-adjusted income meanwhile was down by 17% at �302.3m. On an adjusted basis and before taxes the lender swung to a loss of �34.8m from �17.3m.