Commenting on this morning’s UK GDP data Melanie Baker, Senior Economist at Royal London Asset Management, said:
“This is still a prolonged stretch of sluggishness for activity growth in the UK. GDP rose just 0.1% in the three months to April and it is still the case that the level of UK GDP in real terms has barely grown at all since late 2021. Output is still only 0.3% above pre-pandemic levels.
There is a good chance that the UK records a negative quarter of growth in Q2 given the pace of recent GDP growth and the chance of back revisions. Business surveys, however, namely the PMI surveys, look consistent with increases in private sector output in May at least.
I still have a technical recession pencilled into my UK forecast, but there is a limited difference between a short modest technical recession and the kind of growth we’ve seen in the UK post-pandemic.
Next week’s CPI figures and yesterday’s labour market statistics are going to be more important for Monetary Policy Committee decision-making at this point than today’s GDP figures, in my view. The Bank of England remain concerned about inflation and yesterday’s labour market report looked consistent with further rate hikes.”
The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.