12 April 2024
If you are covering the latest UK GDP data, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“The UK has continued its positive start to the year as GDP grew again in February, albeit only marginally, and looks on course to be pulled out of the short and shallow recession it entered at the end of last year.
“UK GDP is estimated to have risen 0.1% in February, a slight dip compared to January’s 0.3% growth which was revised up from 0.2%, but still positive nonetheless. This uptick was driven primarily by improvements in the UK’s services and production sectors.
“Though the UK appears to be entering a slightly more positive period, the economy is still sluggish, and given inflation recently fell to 3.4%, the Bank of England will be facing ever mounting pressure to begin cutting rates. However, the Bank has maintained a data dependent resolve and it will continue to do so until it is satisfied that inflation has come down far enough and will not see a further spike.
“The reduction in the energy price cap kicked in this month and could contribute to a decrease in headline inflation in the near term, but there is still the possibility that the UK could face further inflationary surges. We can expect the Bank to tread carefully, but it also risks being overly constrictive if it holds rates at this level for too long.
“We have a few more weeks to go until the BoE makes its next move, and while it will be keeping a watchful eye on inflation levels and labour market data, the first rate cuts are looking increasingly on the agenda.”
