UK GDP flat in April, struggling to grow; potential for Bank of England interest rate cut

From Morningstar: 2024-06-12 08:22:00

The UK GDP remained flat in April, with a 0% month-on-month change reported by the Office for National Statistics. This data, along with recent unemployment and May inflation numbers, will be crucial for the Bank of England’s upcoming meeting. The UK economy is struggling to grow, with just a 0.6% increase since April 2023.

April saw poor performance in the UK, particularly in sectors like manufacturing, industrial production, and construction, with weather conditions contributing to the setbacks. Michael Field, European market strategist at Morningstar, believes that this economic data might prompt the Bank of England to consider an interest rate cut to stimulate growth.

Neil Birrell, chief investment officer at Premier Miton Investors, suggests that the Bank of England could benefit from a rate cut to support the struggling UK economy. The recent unemployment and wage data, alongside May inflation figures, will influence the Bank’s decision-making process. In April, UK inflation was at 2.3%, close to the 2% target.

The European Central Bank recently cut interest rates for the first time in five years, impacting market expectations for further rate cuts this year. The Federal Reserve is set to announce an interest rate decision shortly but is unlikely to make any changes. The economic landscape remains uncertain, with central banks closely monitoring data and making strategic policy decisions.



Read more at Morningstar: UK Economy Fails to Grow in April