Uninspiring UK first-quarter growth and we shouldn’t expect it to get better

A day after the Bank of England upgraded growth and inflation forecasts for the UK, economic data confirmed the country posted growth (just) in the first quarter but it wasn’t all good news. ​

The UK economy squeezed out a tiny amount of growth in the first quarter but it didn’t end it in a promising way, with the monthly number unexpectedly posting a 0.3% contraction. While that may have been driven in part by strike action, the fact that the economy is basically flatlining means it won’t take much to tip it into contraction or even recession.

Consumer activity has remained surprisingly resilient throughout the last 12 months despite the cost-of-living crisis which has enabled the economy to avoid recession until now but with interest rates still rising and increasing numbers being stung by higher mortgage rates as time passes, you have to wonder how much longer that can last.

And the Bank of England forecasts on Thursday weren’t particularly promising with inflation revised much higher later this year, indicating it is concerned about how stubborn price pressures will remain. Once again, the next few months will tell us an awful lot about how quickly we can expect inflation to fall and whether the MPC is being optimistic or pessimistic with its projections.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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