UK Rate Rises Impact Not Yet Felt

The UK economy hasn't made any progress for a year. It bounced back from the pandemic but didn't go further. In the last four quarters, there was only a 0.1% growth in three of them. The economy declined by 0.1% in the remaining quarter.

It's not normal. Economy staying neutral for a year is uncommon. It usually leads to either recession or recovery. It seems like we're moving towards recovery, but it's still too early to know for certain.

Good news! The economy kept growing during a difficult winter. It faced challenges like high inflation and many strikes. But it still grew by 0.1%, which was better than what experts predicted.

Things are getting better. Strikes will happen less often. Inflation is going down; it was 6.3% in the first three months of 2023, compared to 7.3% in the last quarter of 2022.

The economy is not doing well. The growth in the first quarter happened only in January. There was no growth in February and the economy shrunk by 0.3% in March. Consumer services were not doing well, with retail activity dropping by 1.4% and food and accommodation falling by 0.8%. People are feeling the impact of higher interest rates and the cost of living. The wet weather in March also didn't help.

Consumers won't feel the full impact of 12 interest rate increases right away. The Bank of England says about two-thirds of the effects still need time. There was a bank holiday for the coronation, so the economy will stay steady in Q2.

The interest rates may rise more, so don't celebrate yet. The economy is still 0.5% smaller than in 2019 before Covid-19.