12 May 2023
If you are covering UK GDP for March and Q1 2023, please see comments from Marcus Brookes, chief investment officer at Quilter Investors:
“As the Bank of England rips up its recession forecast for the UK economy, it will be breathing a sigh of relief this morning as latest figures confirm the UK returned to growth with a 0.1% uplift in GDP in the first quarter of 2023. For now, recession continues to be avoided, though for many this will be little in the way of comfort given the cost-of-living crisis they have had to endure.
“However concerns remain about the resilience of the economy with March figures reporting 0.3% fall as the UK economy remains on the resuscitation table and continues to lag developed peers. While avoiding a recession should be welcomed, the alternative isn’t exactly something to get excited about unfortunately.
“Just yesterday the Bank of England hiked interest rates yet again, and given inflation remains sky-high it is not yet clear whether the Bank is nearing the end of its hiking cycle. Inflation is expected to drop in the coming months which may allow for a pause, but the fact that the economy seems to be holding up in the face of rising interest rates means we may be some way away from the possibility of cuts. Ultimately, the Bank of England has to weigh the delayed impact of prior rate rises which will not be hitting yet. It continues with the tricky balancing act of understanding how much more it needs to do to reduce inflation without tipping the economy nearer a recession, given the well-known lags of monetary policy.”
