The U.K. economy saw a slight boost in February, with gross domestic product rising 0.1%, according to the Office for National Statistics. This growth aligns with expectations and marks a small step towards recovery after the country experienced a technical recession in 2023.
While the economy contracted in the previous two quarters, data for January was revised upward to show growth of 0.3%. Construction output declined by 1.9% in February, but production output increased by 1.1%, with the services sector also contributing positively to GDP.
Analysts believe that the recession has likely ended, with the chief U.K. economist at Capital Economics stating that the recent data supports this conclusion. However, concerns remain about the strength of the economic recovery and its impact on inflation and interest rates.
British inflation dropped to 3.4% in March, while the U.S. saw higher than expected price increases, delaying expectations for interest rate cuts. Goldman Sachs revised its forecast for Bank of England rate cuts, predicting four cuts starting in June.
As the U.K. approaches a national election later in the year, policymakers may face pressure to address interest rates sooner rather than later. Despite signs of improvement in certain sectors like manufacturing and car production, overall growth remains below pre-pandemic levels and lags behind the U.S.
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