UK economy grows by 0.1% in the first quarter but inflation continues to weigh

A member of the general public walks by heavy rain close to the Financial institution of England in Could 2023.

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LONDON — The U.Okay. financial system grew by 0.1% within the first quarter, following an surprising contraction in March, official figures confirmed on Friday.

Economists polled by Reuters had forecast the identical progress determine for the primary three months of the yr, however anticipated stagnation in March, versus the 0.3% fall recorded.

U.Okay. progress has been muted to this point this yr, coming in at 0.4% in January and flat in February, after the financial system narrowly prevented a technical recession in 2022.

Inflation stays a extra extreme blight on the U.Okay. than on different main economies, with the March studying nonetheless above 10%.

The Financial institution of England on Thursday raised rates of interest by 25 foundation factors to 4.5% making its twelfth consecutive hike in an try and fight stubbornly excessive costs. Extra optimistically, the central financial institution stated it now not expects the U.Okay. to enter a recession this yr, regardless of beforehand forecasting its longest-ever recession.

The Financial institution of England now forecasts the U.Okay. GDP can be flat over the primary half of this yr, rising 0.9% by the center of 2024 and 0.7% by mid-2025. 

“It might be the largest improve we have ever completed,” BoE Governor Andrew Bailey informed CNBC on Thursday, defending the revision as the results of a altering image from conditional knowledge, together with monetary markets, commodity costs and authorities coverage.

“The extent remains to be fairly low although, let’s be sincere,” Bailey added.

The euro zone recorded simply 0.1% progress within the first quarter of the yr, with Germany — the bloc’s greatest financial system — stagnating.

It is a breaking information story and can be up to date shortly.

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