The UK economy has shown a slight improvement in February, growing by 0.1%, which, combined with January’s revised figure of 0.3%, means the country has experienced growth for two consecutive months. This is significant as the UK was in a recession last year after two quarters of contraction. While there is still some uncertainty regarding interest rate cuts by the Bank of England, it seems like the country has managed to overcome the recession.
For the markets, there is a bit of uncertainty regarding interest rate cuts by the Bank of England. Inflation in the UK is expected to reach the BoE’s 2% target later this year, but traders are divided on when this will lead to rate cuts. While some predict two cuts, others believe there could be four. The BoE itself is reevaluating its forecasting model after significant shortcomings were revealed. All central banks are cautious about cutting rates based solely on data.
On a personal level, UK wages are now rising faster than inflation, giving Brits more financial flexibility. With the reduction in National Insurance tax this month and falling mortgage rates due to rate cut predictions, workers will have some extra income to spend. This may lead to more people looking to purchase homes in the near future.
