Thursday, 20 June 2024
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EconomyEurope

Further evidence of a recession recovery is the 0.1% rise in the UK economy in February

  • The UK‘s GDP increased by 0.1%, suggesting that this year’s slow growth in the economy is returning.
  • With a 1.1% increase, production output was the largest contributor to GDP in February.
  • Inflation in Britain decreased more than anticipated in March, coming down to 3.4%, the lowest level in almost 2.5 years.

In February, the UK’s GDP increased by 0.1%, suggesting that this year’s slow growth in the economy is returning. This statistic is 0.2% lower annually and is consistent with a Reuters survey.

In 2023, the economy shrank in the third and fourth quarters, resulting in a technical recession in the United Kingdom. The 0.3% growth rate for January was increased from the original 0.2%. With a 1.1% increase, production output was the largest contributor to GDP in February. The booming services sector in the UK shrank from 0.3% to 0.1% growth.

UK economy

The reading, according to Paul Dales, chief U.K. economist at Capital Economics, “all but confirms the recession ended” last year. He doesn’t think it will be powerful enough, though, to stop inflation and interest rates from declining as much as they seem to be in the United States.

Inflation in Britain decreased more than anticipated in March, coming down to 3.4%, the lowest level in almost 2.5 years. This week’s 3.5% price increase in the U.S. exceeded forecasts, delaying market wagers that interest rate decreases will begin in September rather than the summer.

This has sparked concerns about whether central banks abroad will be affected by the Federal Reserve starting later than anticipated, especially if the value of the US currency appreciates.

Goldman Sachs reduced its prediction of five rate cuts by the Bank of England this year to four, estimating that the reductions will begin in June and then taper off to a quarterly pace. Growth is trailing the United States and falling short of its pre-pandemic pattern, although it is comparable to much of Europe and has shown indications of improvement in sectors like manufacturing and auto production.

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