GDP and base rate

Whilst there will be plenty of high 5’s in the cabinet this morning, I don’t think this marginal improvement in GDP will affect any base rate cuts planned over the coming months. The economy hasn’t started to be affected by higher energy costs, increase in NI contributions and the general financial unrest. The recession is firmly around the corner.

A recession avoided, for now, but this is no time to celebrate, with the broader trajectory of the UK economy remaining uncertain. While this growth spurt may appear to delay the BoE’s dovish pivot, it’s important to remember that underlying economic fragility persists. Households and businesses continue to feel the strain of elevated borrowing costs, and a single data point does not signal a sustained recovery. The UK remains trapped in a low-growth, high-rate environment, and the battle between policy patience and economic pressure is only just beginning. Mortgage markets are likely to remain volatile as expectations shift, with the outlook for rates, mortgages, and risk assets still uncertain in the months ahead.