The UK's GDP numbers reveal a stagnant economy, presenting a 0.1% contraction in January and a year-on-year growth rate of only 1%. As the Chancellor prepares for the Spring Statement, these figures disappoint by failing to show significant improvement despite previous signs of resilience. While there are modest expectations for short-term growth due to falling interest rates and government spending, challenges such as skilled labor shortages, reduced consumer confidence, and higher employment costs could hinder recovery efforts, casting doubt on the sustainability of any economic uplift.
Overall, there could be a small improvement in the short term. Consumers and businesses will continue to benefit from falling interest rates with three cuts made since last summer.
The year-on-year number of 1% growth indicates an economy stuck in first gear rather than reverse, but with an outlook clouded by an uncertain trajectory of global inflation and additional costs.
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