11 April 2025
If you are covering the latest UK GDP figures, please find below a comment from Marcus Brookes, chief investment officer at Quilter Investors:
“Following a bleak reading in January, the UK’s latest GDP figures for February show a sign of an improvement in the economy. For the month, the economy saw growth of 0.5%, with growth over the last three months an equally better than expected 0.6%. Furthermore, January has actually been revised up from negative growth to no growth in the month.
“The problem facing the UK, however, is that things are incredibly volatile in the world for what is a very fragile economy. President Trump may have ‘paused’ the reciprocal tariffs on other countries, but the new regime remains unchanged for the UK. If anything, the UK has lost a competitive edge having previously got off lightly in Trump’s announcement last week. This global economic uncertainty is going to do very little for consumer or business confidence in the UK and as such growth will continue to be lacklustre.
“This presents a conundrum for both the government and the Bank of England. Keir Starmer and Rachel Reeves have staked their government on producing economic growth, yet have found their hands tied by the situation the UK finds itself in. Today’s reading will be a welcome relief, but if it is to be sustained then more radical measures may be required, but market appetite for that is simply not there just now. That leaves the Bank of England being relied upon to deliver rate cuts in order to stimulate growth, but it will be wanting to act cautiously with fears Trump’s tariffs will raise inflation globally.
“The UK is in somewhat of a precarious position right now, caught in the crossfire of the constantly changing economic policy of the US. The government will need to think creatively and find some quick wins in order to sustain this positive reading and negate the economic impact tariffs will bring.”
