UK economy grew by 0.1% in first quarter of 2023: Comment

GDP figures show the UK economy grew by 0.1% in first quarter of 2023; here is a comment from the City.

Garry White, Chief Investment Commentator at Charles Stanley, comments:

“Six months ago, the Bank of England (BoE) said Britain would into its the longest recession since records began over the course of 2023. It warned the UK would face a “very challenging” two-year slump with unemployment nearly doubling by 2025.

These forecasts were clearly too gloomy – and the BoE has been forced to upgrade its view. Today’s figures showed the UK economy grew 0.1% between January and March, in line with expectations.

However, the stickiness of inflation, especially in food, is starting to prove problematic. It remains stubbornly high – and the central bank has indicated now it may have to raise interest rates even further to bring price rises under control.

This follows 12 consecutive increases that brought the base rate to 4.5%. This difficult balancing act between bringing inflation down and while not causing an economic slowdown to spill over into a contraction is a difficult challenge for the BoE. This means that the risk of a recession remains.”