UK financial progress, February 2024

LONDON — U.Okay. gross home product rose 0.1% in February, the Workplace for Nationwide Statistics stated on Friday, offering one other signal of a return to sluggish financial progress this 12 months.

The month-on-month determine was according to a projection in a Reuters ballot. On an annual foundation, GDP was 0.2% decrease.

The economic system contracted within the third and fourth corners of 2023, placing the U.Okay. in a technical recession.

January recorded light growth, which was revised upward to 0.3% on Friday.

Building output, which boosted progress initially of the 12 months, fell 1.9% in February. As an alternative, manufacturing output was the largest contributor to the GDP, rising by 1.1% in February, whereas progress within the U.Okay.’s dominant companies sector slowed to 0.1% from 0.3%.

The studying “all-but confirms the recession ended” final 12 months, Paul Dales, chief U.Okay. economist at Capital Economics, stated in a word.

“But while we expect a better economic recovery than most, we doubt it will be strong enough to prevent inflation (and interest rates) from falling much further as appears to be happening in the U.S.,” Dales added.

British inflation fell more than expected in March, to a virtually two-and-a-half 12 months low of three.4%.

Within the U.S., nonetheless, worth rises got here in higher than forecast at 3.5% this week, pushing back market bets for the beginning of rate of interest cuts from the summer time to September.

This has raised questions on whether or not central banks elsewhere will likely be influenced by a later begin from the Federal Reserve than beforehand anticipated, significantly if the U.S. greenback strengthens.

Goldman Sachs on Friday revised its forecast for Financial institution of England fee cuts this 12 months from 5 to 4, projecting the trims will begin in June, earlier than slowing to a quarterly tempo.

Simon French, chief economist at Panmure Gordon, informed CNBC’s “Squawk Box Europe” on Friday that whereas the BOE is unbiased, policymakers will nonetheless take heed to an upcoming U.Okay. nationwide election, which politicians have instructed will likely be held within the second half of the 12 months.

“Do you get [cuts] out of the way ahead of that general election? There is quite a lot of pressure from the governing party, not necessarily the prime minister but the chancellor has talked about expecting rate cuts.”

Total, French stated the figures strongly indicated the tip of the recession however had been “not a reason to hang out the bunting.”

Development is under its pre-pandemic pattern and lagging the U.S., however is on a par with a lot of Europe and confirmed indicators of a pick-up in areas comparable to manufacturing and automotive manufacturing, French added.

— CNBC’s Ganesh Rao contributed to this story